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Banks have increased their onslaught of credit card customers to offset losses due to increases in bad debts and the cap on overdraft fees.

“The tactics used include the magically appearing annual membership fees, charges for pseudo-cash products such as credit-card cheques, and hidden catches in balance-transfer deals.

The banks have been playing a sleight-of-hand game with their consumers for years. Now it has stepped up to levels that catch most consumers off-balance. In fact, many consumers build up hundreds of pounds of ‘hidden’ charges before they catch onto the bank’s ploy.

One of the biggest tricks is the five pound scheme. The credit card has no minimum balance each month.  Instead of a minimum monthly repayment the customer pays the monthly interest, plus premiums for payment protection insurance, plus fees, plus £5. However, this means that the average person never actually repays any of the capital from one year to the next.

Another scheme pays of the least expensive debt first.  The more expensive debts accrue more interest for longer periods – and of course, the interest is often calculated on the full total of the purchase until paid in full.  This means that all the small purchases are repaid quickly, leaving the large payments languishing on the card for months, or years.

Credit card, and most unsecured loan debts, have higher interest rates than personal loans.  Some unsecured loan debts are currently as high as 25%, and expected to increase at least one more time this year.

“The government is looking tired and stale, and Brown has been tarnished by that,” said Peter Kellner, chairman of YouGov Plc, a polling company. “On its own, the budget won’t be enough to turn around Brown’s fortunes. It will be part of a bigger process to win back support.”

Debt reduction has not been a main priority for Britain’s budget since 2003. Brown expects a deficit of 2.8 percent next year.

“He doesn’t have much room to maneuver,” George Bull, of tax at Baker Tilly Financial Services in London, said. “He should take measures to boost competitiveness, but he doesn’t have the money to finance a cut in tax.”

“The rise in public spending as a share of GDP in the last five years has been striking,” Brian Coulton, an analyst at Fitch Ratings Inc., said in a note to clients. “It has been sharper than the previous episodes of rapid growth over 1980-83 and 1989-1993, both of which encompassed two major recessions.”

Most consumers are unable to fathom the limits of government debt.  However, the more loans the government carries, the more burden is put on the average consumers.  Many consumers are hoping for tax breaks.

Consumers are rarely interested in the budget, beyond learning whether it will offer financial relief.  Tax relief increases consumer’s ability to repay their own personal loans, or secure future loans.

Consumers are frustrated at the government’s attempts to curb their own spending through increased taxes on loans, while increasing the national debt through their own spending.

If you are a student in Uni, you are probably busy concentrating on your studies and trying to get an education that can benefit you for the future. A proper financial education is not one of the most important things on your mind.  However, it is during your time as a student that you should start learning the basics of managing your finances.  By learning how to properly manage your finances early on, you will then be able to properly manage your finances in the future and start off your life with little or no debt.

If you own a credit card, you will want to avoid using it, except in emergency situations.  If you do use a credit card, then you will want to make sure that you pay off your balance each month.  Carrying a balance on your credit card will cost you extra in interest, so paying off the balance before the interest-free period will save you.

If you are paying bills, such as utility costs, you will want to make sure that the bills are paid on time.  By paying your bills on time, you will start building your credit history and a good habit.  If you fail to pay your bills on time you will be charged late fees, which can easily add up.  To ensure payment on your bills, you can set up a standing order or direct debit. A good credit history now will help in later life when you need a personal loan for buying a car or a mortgage to buy your first property.

Finding a good bank account is important, and because several banks offer discounts on student accounts you shouldn’t find it hard to find a good account.  You will want an account that will offer you an overdraft and a good interest rate.  It pays to shop around, so before settling for a bank, make sure that you check out what other banks are offering.

Debt statistics are updated monthly.  Government, banks, and loan firms use these numbers to determine how they do business.  Consumers can use these numbers to differentiate between ad copy - meant to sell products - and a real look at the UK economy

The total UK personal debt exceeded £1.25 trillion.  At the end of January 2007 it stood at £1,300bn. The growth rate increased to 10.5 per cent for the previous 12 months, or an increase of £114bn.

Total secured loan lending exceeded £1 trillion (£1,000 billion) and at the end of January 2007 it stood at £1087bn, an 11.5 per cent increase over the last 12 months.

The average household debt in the UK is £8,795 (excluding mortgages) and £53,701 including mortgages.  This is far less than IVA and debt management firms are claiming.  These numbers bring the supposed ‘debt mountain’ to a more manageable ‘hill’ – and corroborates the Bank of England’s numbers.

Average owed on loans by every UK adult is £27,638 (including mortgages). This grew by £200 in February 2007.

The average interest paid by each household this year is approximately £3,425 each year.

The average unsecured consumer borrowing via credit cards, motor and retail finance deals, overdraft loans and unsecured personal loans rose to £4,526 per UK adult at the end of January 2007.

Britain’s personal debt is increasing by £1 million every 4 minutes.

This paints a strong picture of the average UK consumer’s ability to manage their debt.  While many households are struggling under debt, many analysts believe that a good debt management councillor will serve most UK consumers better than an IVA firm.

If you enjoy travelling and do a lot of business or personal travel, then you may want to consider taking advantage of a travel credit card.  There are a number of different types of credit cards available to consumers, and one type of card is a travel credit card.  A travel credit card is also referred to as an air miles credit card, and offers the cardholder the benefit of gaining air miles for every purchase that is made.  The collection of air miles can then be redeemed for air tickets or travel discounts.

Travel credit cards are very popular amongst those who travel often, or travel far distances.  However, not all travel credit cards are the same.  There are some cards that will only allow you to receive air miles when air travel tickets are purchased on the card, while other cards give you air miles for every purchase that you make.  Other credit cards will usually offer a large up front air mile package where you receive a considerable sum of air miles on your first purchases, usually between 5,000-20,000 points.  So before you decide upon a travel credit card, you will want to familiarise yourself with the terms and conditions of the card.

As you are searching for a travel credit card, you should consider a few things, such as the interest rate on the card.  You benefit from a travel credit card, or any reward credit card by paying off the balance on the card in full every month.  Often travel credit cards, or any reward scheme credit card, offer higher interest rates than a standard credit card, and if you do not pay off the balance in full each month you will end up having to pay the higher interest rate on your purchases.  You will also want to consider things such as the expiration of the points. Often travel cards will only allow you to carry travel points for a specified length of time, which means that you will have to redeem them before a certain time.  So be aware of the expiration of your points, and how long they will last.   Remember to check the rates for borrowing money on the card - you may need to take out cash whilst abroad and this usually attracts a higher rate of interest and is always the last debt to be paid on a card.

The UK banks are preparing to defend their market against the same problems seen in the US sub-prime market.

Will the US situation hit the UK? Boulger of mortgage broker John Charcol does not think so. ‘But it is something the regulators will be taking into account. A lot of borrowers in the US were on short term ‘teaser’ rates and suffered payment shock when they moved to the standard rate.’

This is something that many UK consumers are being faced with. Despite the UK’s belief that their market is immune, there are parallels between the markets.

‘In the UK it is looking more and more likely that the Bank Base Rate will peak at 5.25%. I would put it at a 50-50 chance. Even if the economy does suffer because of what is happening in the US, we will be less susceptible to a downturn as we have lower exports to the States.

‘In addition we don’t have the same high proportion of sub-prime borrowers on 100% home loans. But if there is any tightening of lending criteria it is going to happen in the sub-prime and adverse markets,’ Boulger says.

Boulger believes that ‘the lenders have found that credit scoring is a very efficient predictor of those borrowers who will default,’ Boulger says. ‘You can never be certain, but I don’t think in the short-term what is happening in the US will affect lending criteria here.’

This is dividing the market into two segments, those who will strengthen the market by investing in property to build wealth, and those who will undermined it by borrowing mortgages which they cannot repay.

If you are looking to get a loan, your credit history can have a big effect on the outcome of the loan.  If you have bad credit you will have to expect a higher interest rate, or you may be required to take out a secured loan.  That is why many people strive to build a good credit history.  Although building a good credit history may be hard for some, with time, discipline and hard work you will be able to build a good credit history.

To start rebuilding your credit history you will need to develop a budget and live by it.  Through a budget you will be able to know how much money is coming in every month and how much you are spending.  By listing all your income sources against your expenses you will be able to know how much you will be able to afford should you take out a loan.  You should never take on a loan that you are unable to comfortably afford.

Budgeting will help you keep track of your expenses and allow you to maintain better control on your finances.  Other things to consider to ensure your credit report will reflect a good credit history is to pay your bills on time and to pay them in full.  This includes your credit cards, store cards, or utility bills.  You will also want to review your credit report annually to ensure that there are no errors or suspicious activity.  If you find that there are errors on your report then you will want to take the necessary steps to remove them from your report.

The trickle effect has finally hit the UK economy as consumers tighten their belts after four, almost successive, interest rate hikes. However, analysts are still reminding consumers that the interest rate has not hit the ‘breaking’ point of 6 per cent, nor has it hit the levels it did a decade ago.

Despite high spending in the retail sector last January, there are now reports which indicate that consumers are not spending as heavily as they once did.

Nationwide’s Consumer Confidence index is slightly higher than last month, as reported in Reuters.

“The index seems to be showing that consumers are responding to the three increases in interest rates. All of the indices are well below the levels recorded before the first rise in rates,” said Nationwide chief economist Fionnuala Earley, reports Reuters.

“Consumer sentiment remains fairly downbeat, but underlying feelings about jobs and income have not collapsed which suggest a fairly stable economic background,” she added.

However, there is good news for consumers who are trying to reduce their debt.  The Bank of England increased the interest rate in an attempt to lower the inflation rate.  While the interest rate impacts the economy, short term, a high inflation rate would create problems for years to come.

This leaves consumers who are trying to build wealth a window of opportunity to take advantage of the buy-to-let or residential housing market.

This is a good time to start a new business in many sectors except retail.  It is still relatively easy to apply for a secured loan that can be used to set up a business.

The number of homeowner loans, mortgages, that were approved in December 2006, was down to 113,000 approvals from 129,000 in November.

Alone, these figures may be interpreted as evidence that the property market is about to slow, except for the fact that demand still outstrips supply, especially in the area of buy-to-let, and eco-friendly homes.

The Nationwide building society said that house price growth slowed in January, following recent interest rate rises. However, it still grew 1.8 per cent, maintaining an annual 10 per cent increase.

However, people who are anticipating putting their home on the market are still enjoying a ‘seller’s market.’  December is traditionally a quiet month for house buying..

However, approvals are regarded as an important indicator of short-term trends in the housing market. The market expected a short term drop after the Bank of England increased interest rates four times in approximately six months.

Investors are not worried. They still point to the fact that interest rates are still far below historical numbers, and that they are still below the ‘wealth building’ break-off point of six percent.

At £10.6bn the money lent in the form of homeowner loans during December was another record, even though the banks approved less loans, reflecting the strong rise in house prices in the past few months.

The investors are not worried. There is still plenty of room to take out a secured loan to improve a home, or prepare it for the buy-to-let market, and make a substantial profit, especially in the London areas.

There are new reports that indicate there is a risk that the UK’s housing market is overvalued and heading for a “downward adjustment”, according to the International Monetary Fund (IMF).

The IMF stated that they used several indicators that suggest that the house price growth will continue to increase and that properties are “likely overvalued”.

“In light of estimates that house prices are already overvalued, this would increase the subsequent risk of an abrupt downward adjustment,” the IMF stated.

Nationwide claims that the average house price in the UK has reached £174,706 in February.  The annual house price inflation rose to 10.2 per cent.

A spokesman for the Treasury said that the economy has experienced economic growth for 58 successive quarters and that the UK continues to meet “strict” fiscal rules, according to a report in the Telegraph.

There are several intangible indicators that will have an impact on the housing market. The most prevalent indicator is the introduction of environmentally friendly homes.

The introduction of these new homes will have a direct impact on the types of homes that will continue to increase in value.  These news homes emit less emissions and fewer product waste.

Britain has already seen the introduction of eco-towns that are hailed as prototypes for future developments.  Currently, 45 councils have already instigated plans to create eco-homes.

Consumers who are interested in building wealth are looking at methods of improving their current homes, before selling them, so they will receive the bonus sale’s value of having an eco-home.