Are we becoming more and more afraid to use our credit cards due to the ongoing credit crunch saga as it tightens everyone’s financial belt up another notch? A recent survey by The British Retail Consortium has indicated a 2% increase from 32% to 34% indicating that we are spending more cash in today’s society.
The reason for this is simply down to the credit crunch. More and more people are afraid to run up high interest rates by using their credit cards and therefore prefer to use cash instead.
It was thought that the UK was fast becoming a cashless society as more and more plastic transactions were taking place each year. This was mainly down to its simplicity and convenience, no need to carry all the change around with you when you can carry a small credit card with all your money available on it.
This is the first time in over two decades that the percentages have made a u turn. The UK saw an increase of
Filed under Finance by on Sep 1st, 2010. 
Have you seen the commercial showing the entire world of people, flowers and animals merrily skipping about until one person writes a check for their purchase? The whole world comes to a dead stop waiting for the consumer to write out a check. The audacity of the consumer to actually slow things down by writing a check. How shocking.
That use to be me as I stood in line with my debit card in hand. Then I saw that commercial and something within me snapped. I realized we are becoming an automated cashless society. So now I sing praise to the poor soul slowing things down as he/she uses a check. And I sing even great praise to those paying with cash. Why?
Years ago we paid for things with greenback almost exclusively. There is a certain degree of pain when a greenback gets broken to lower denominations or worse yet leaves your hands entirely. Checks often times replaced cash and the pain is a whole lot less but we as a society have had it ingrained within us that there had to be cash in the bank to cover the check.
But then strange phenomena occurred in the 80’s. It was the inundation of the credit card – you didn’t need any money in the bank at all. It was completely painless… until the statement came. And for those rare individuals who balked at the idea of credit cards, there was the debit card. It works just like a check only it is more distant than a check and the most amazing part is, it looks just like a credit card. Imagine that! The point of the dry humor above is this. With each step away from cash and towards plastic, the associated emotional pain of handing over money becomes less and less. Like Scarlet in Gone With The Wind, we can “think about it tomorrow.”
But most importantly we not only tend to loose sight of the greenback, but of the greenback’s value as well. This may be all well and good for the advertisers and merchandisers, but not necessarily for the consumer when the bills come due and he/she has not a clue how this struggling debt came about.
Many would have you believe that increased spending is good for the economy. That maybe true for political economists. And if so, do we ever do a good job. But what is even better for the economy is increase savings and we as consumers have never done a worse job. Bankruptcies continue to increase which cannot be good for the consumer or merchandiser. Prices continue to rise and we are so grateful with an increased minimum wage but price increase precedes increase wages- not sometimes but always! The national debt gets bigger and bigger and consumer net worth gets smaller and smaller.
Consider this. If more consumers slowed down enough to realize the pain of forking over hard earned income, perhaps there would be more savings and less debt. Who knows, we might even teach some politicians the same thing and get our national debt under better control.
Somehow as a society we need to come to grips with the fact that the credit card has absolutely no power. It cannot purchase the smallest item. The only power of the credit card is the money that is behind the card. In other words if you can’t afford to pay for it in cash you can’t afford it. Just as the check was nothing more than an IOU, the credit card is also. By postponing paying off a credit card you are selling your future dollar as well as any interest that dollar could earn for you.
Re-read the above sentence. It is the heart and soul of the problem with a cashless society. By eliminating any emotional cost of spending our dollars we are not only saying goodbye to our future wealth but also saying goodbye to any accumulated wealth we might have earned form those dollars being set aside in savings and investment.
I am not saying never buy anything. What I am saying is we need to stop for a moment and realize we have two choices. We can make this purchase or we can take that same money and get it working for us. Your future and that of the family will be based on countless decisions as to whether you want not only this item now but whether you are willing to sacrifice the interest this money could be earning for you.
When we paid in greenback the decision was much easier because there was emotional pain with passing over hard earned money. With plastic, the emotion is much less removed… and that’s just how the merchandiser wants it. But what do you and your family want? Do you want the item in front of you by using your card and paying for it with the stolen future wealth? Or do you want the secured wealth itself for your family’s future?
By: Michael Killian
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Filed under Finance by on Jun 19th, 2010.
Not only do all of these products have very good interest rates but they also have high loan to values of 80%, making them attractive and accessible to the widest possible number of consumers in the market.
Until this week only one of their mortgage products featured in any of the mortgage best buy charts and that was in the category of long term fixed rate mortgages. This product has even seen its rate cut by 0.1% to 4.89% and the product fee has been lowered from £994 to £588. The fees for other products are all in line with other mortgages in these categories.
So why have the Newcastle Building Society launched this assault on the mortgage market? Is it that they have the funds available to capture more mortgage customers at a time when other providers are less willing to offer such deals? Or are they looking to bolster their income in light of the turmoil in the mutual building society sector which in recent months has seen an unprecedented number of “mergers” (takeovers)?
In my opinion it is the latter as it has been rumoured for quite some time that the Newcastle is ripe for a takeover. Due to the recent consolidation in the market it is unlikely that the Newcastle has the critical mass to survive on its own. In addition to that the smaller targets that the Newcastle could have taken over to protect itself from takeover have already been swallowed up by other societies.
The obvious choices for who would be looking to take them over have both recently been involved in takeovers of other building societies, Yorkshire Building Society is in the middle of taking over Chelsea Building Society and the Skipton Building Society has only just completed its acquisition of the Scarborough Building Society.
My money is on The Skipton, they are ambitious and they are about to come in to ready cash from the sale of one of their other businesses. But I suppose it is a case of watch this space. The only thing for certain is that this period of mergers, takeovers, acquisitions and consolidation in the mutual building society sector is far from over.
The only possibility of survival the Newcastle Building Society has is to acquire or merge with at least two other building societies and fast. The Cumberland would be a good choice and could add some required synergies in terms of geography but they better be quick.
By: Malcolm Murphy
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Read more on Why has the Newcastle Building Society released a new range of mortgages?…
Filed under Finance by on Jan 6th, 2010.
Just to explain the term, mutual refers to a financial institution where the savers and borrowers actually own the capital of the business and no shareholders exist. The organisation is run for the benefit of its members and not shareholders.
The current economic climate and the continuing fallout from the “credit crunch” is forcing some of the smaller societies and some of the not so small building societies to seek the help of larger more stable institutions to ensure they are protecting the interests of their members.
There have been a number of high profile rescues by the Nationwide Building Society, the UK’s largest mutual society in the last 12 months. They have had to step in to rescue the Cheshire, the Derbyshire and the Dunfermline Building Societies.
It appears this trend is set to continue as smaller societies struggle to cope with the current trading environment. However, it is not just the smaller societies that are struggling, earlier this year the West Bromwich Building Society, the 5th or 6th biggest mutual in the UK had to approach the Financial Services Authority regarding its ability to continue trading.
Such were the problems there, the FSA agreed to invent a new type of share to allow the institution to borrow funds and stabilise its balance sheet. A move that many in the mutual building society sector disapproved of as it meant that there was now a layer of investors above the members (the savers and borrowers) which goes against the ethos of mutuality.
In the last year the number of building societies has shrunk from 59 in 2008 to 52 in 2009 and it is inevitable that this number will reduce further in 2010.
The Government and the FSA are said to favour the idea of having 4 or 5 major building societies referred to as “sector champions”, who are able to compete with the large banks. While the smaller societies of which there are many resort to lending at a local level.
Looking at the current assets and customer bases of the larger building societies these “Sector Champions” are likely to be:
Nationwide Building Society Britannia Building Society Yorkshire Building Society Skipton Building Society Leeds Building Society West Bromwich Building Society
My own opinion on this is that it is “pie in the sky” thinking as the modern world does not operate on a local level and most of the smaller societies will have to merge or die. Therefore the best course of action for all concerned would be to merge into about a dozen or so building societies that would be capable of offering competitive products and could enjoy the economies of scale required in the new trading environment.
Either way over the next twelve months there will be massive changes in the sector and many of the smaller societies will be absorbed by larger societies.
By: Malcolm Murphy
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Read more on Building Societies – What does the future hold?…
Filed under Finance by on Dec 28th, 2009.
The drillers of the frugal system restrains from buying unnecessary materials, rather they use resources, such as goods and services efficiently. Their purpose is to commend the last purchase by fulfilling their goals.
A frugal uses a cash economical system. The accents of abridgement is applied to save extra cash and as a saving and only buying what they need. Often they will barter or swap goods or services. This allows them to meet their personal drawn-out-language goals, communistic needs and traditions.
Conservative tactics allow them to save money zeal, change and the skimping all for the purpose of sparing for the next man. Few of the origin tactics of frugal involve boasted changes that commonly cost expenditure or ethnics move to the front. A frugal order abrogates spending for the purpose of achieving gratification instantly through means of self-moderate financial. The self-sufficiency is a structure admirable by some, yet many dispute their ethnicity or morals behind the concepts.
Frugal or the frugality behind this concept includes the needs and carrying of general savings while discovering the purpose of human fallibility intentions rather than focusing on materialistic worship. Frugal structures entice other followers or supporters by accumulating precepts and mannerisms that are something to admire.
Frugality is economical since the prudent frugal will use caution when spending money. Some people believe that these people are stingy, but contrary to their notion, a frugal is someone that appreciates the value of a dollar, and someone who takes pride in the human race.
This is something of difference, which has caused controversial issues or misconceptions to emerge. Frugal is someone that is characterized by his or her reflections the economy in the usage of resources.
In short, these people are highly resourceful and have a good lead on saving economic value. Common grand unified theory backs these ideas, which comprehend saving money to make cash more in order for other individuals. For instance, someone of ecologist nature is also a preservationist that focuses on the environment and its standing. This is what a frugal will do.
However, since religion reasons follow the structure of a frugal, the frugality is unaccepted in some minds. Conservationist often follows the frugal structure in that soon people get ahead their virtues on carrying out humanity close.
The purpose is to exhibitor humanity back to its germ. This includes the forming into a clot to bring knowledge and common people together.
By: Greg Smith
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Filed under Finance by on Dec 27th, 2009.
Take London as an example. They’re actively encouraging people not to carry cash around with them with recent initiatives they’ve introduced.
First of all they issued Oyster cards, which people can use to pay for London’s bus and tube networks, and just recently the Evening Standard made it possible for customers to pay for their newspaper via a cashless payment card.
Now I hear that they’re considering making it possible to pay for parking in the city via mobile phone rather than parking meters so this is yet another reason for people not to carry cash around with them.
If this spreads to the rest of the UK, and if other countries adopt similar initiatives, then it’s surely only a matter of time before the whole of the western world uses technology in the form of prepaid payment cards to make cash obsolete.
The only reason we need cash at the moment is to pay for those small items from retail stores, but the technology is clearly there to make payment cards fit for this purpose, and I think pretty soon it will become the norm to pay for everyday goods via some kind of payment card.
Furthermore the fact that more and more people have mobile phones and access to the internet means that people could quite easily make payments to a payment card via these means. Therefore they would just need to transfer money electronically to their card so they can use it on the high street.
Of course the major downside is that we are heading closer towards the Orwellian world of 1984 and Big Brother where the government knows exactly what you are doing as they can track all your activities electronically.
However as long as you’re not engaging in any criminal activity then I don’t think there’s any major cause for concern, although I’m sure the conspiracy theorists won’t agree.
Ultimately you can’t stop advancing technologies and no matter how much you dislike mobile phones, the internet, and the Big Brother world we are becoming, it’s surely now only a matter of years before we become a cashless society where digital money replaces physical money.
By: James Woolley
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Filed under Finance by on Dec 26th, 2009.
The electronic cash machines we know today were invented a quarter-of-a-century later by Hampshire printing firm, De La Rue; the same company behind high-security paper and printing technologies used in the printing of bank notes. Actor Reg Varney from the popular 1960s TV sit-com ‘On The Buses’ was the first person to use the new cash machine, which was seen to be a strong guerrilla marketing tactic and designed to ensure public adoption of the electronic cash dispenser. As a result, the cashless society was born.
In recent times, the number of cashless alternatives has continued to grow. No longer confined to banks or building societies, cash machines can now be found everywhere; from petrol stations to pubs and there are also more credit and debit card options available than ever before. Furthermore, transactions such as salary payments and direct debits are performed by BACS (Banks automated clearing system), while e-commerce has gained almost worldwide acceptance.
In March 2000, ‘Confinity’, a palm-pilot payment and cryptography company merged with X.com, an Internet financial services company. This merger created the online payment service, PayPal, which was well-received by internet users, with its members being rewarded with $5 for every new member they referred. Before long, Paypal was adopted as the preferred payment method for the online auction site, eBay. Today PayPal boasts in excess of 123 million accounts and operates in 55 different markets, including China.
With such widespread adoption, PayPal can now be used to buy a wide variety of goods and services. Not only can it be used to buy and sell goods on eBay, but PayPal can also be used to reserve a hotel room online. In fact, some of the UK’s leading tour operators have started accepting PayPal transactions via their website. Google are also planning to launch Google Checkout, an online payment service which will further contribute towards the notion of a cashless society.
Nowadays, even teenagers are being targeted towards a cashless society, with a major credit card firm recently launching a prepayment card aimed at children. Although these cards are limited by the amount that their parents deposit onto the card, the scheme has seen a number of concerns raised by the National Consumer Council, who have warned that the cards will get children so used to spending money that isn’t theirs, they will find themselves hopelessly in debt once they are old enough to apply for a credit card. However, supporters of the scheme believe that the cards will familiarize children with using plastic to pay for purchases without spending too much.
It seems that a truly cashless society is inevitable. With recent technological innovations allowing for online banking, bill payments and money transfers, the notion of a cashless society seems to be closer than ever. However, as technology continues to evolve, peoples’ perceptions of a cashless society are getting closer to reality. Some people fear that a cashless society might have a detrimental effect on many of today’s civil liberties that we currently enjoy. For most people though, the advance towards a cashless society is wholeheartedly embraced.
By: Martin Mcallister
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Read more on A Cashless Society: a Future of our Own Making…
Filed under Finance by on Dec 19th, 2009.
The electronic cash machines we know today were invented a quarter-of-a-century later by Hampshire printing firm, De La Rue; the same company behind high-security paper and printing technologies used in the printing of bank notes. Actor Reg Varney from the popular 1960s TV sit-com ‘On The Buses’ was the first person to use the new cash machine, which was seen to be a strong guerrilla marketing tactic and designed to ensure public adoption of the electronic cash dispenser. As a result, the cashless society was born.
In recent times, the number of cashless alternatives has continued to grow. No longer confined to banks or building societies, cash machines can now be found everywhere; from petrol stations to pubs and there are also more credit and debit card options available than ever before. Furthermore, transactions such as salary payments and direct debits are performed by BACS (Banks automated clearing system), while e-commerce has gained almost worldwide acceptance.
In March 2000, ‘Confinity’, a palm-pilot payment and cryptography company merged with X.com, an Internet financial services company. This merger created the online payment service, PayPal, which was well-received by internet users, with its members being rewarded with $5 for every new member they referred. Before long, Paypal was adopted as the preferred payment method for the online auction site, eBay. Today PayPal boasts in excess of 123 million accounts and operates in 55 different markets, including China.
With such widespread adoption, PayPal can now be used to buy a wide variety of goods and services. Not only can it be used to buy and sell goods on eBay, but PayPal can also be used to reserve a hotel room online. In fact, some of the UK’s leading tour operators have started accepting PayPal transactions via their website. Google are also planning to launch Google Checkout, an online payment service which will further contribute towards the notion of a cashless society.
Nowadays, even teenagers are being targeted towards a cashless society, with a major credit card firm recently launching a prepayment card aimed at children. Although these cards are limited by the amount that their parents deposit onto the card, the scheme has seen a number of concerns raised by the National Consumer Council, who have warned that the cards will get children so used to spending money that isn’t theirs, they will find themselves hopelessly in debt once they are old enough to apply for a credit card. However, supporters of the scheme believe that the cards will familiarize children with using plastic to pay for purchases without spending too much.
It seems that a truly cashless society is inevitable. With recent technological innovations allowing for online banking, bill payments and money transfers, the notion of a cashless society seems to be closer than ever. However, as technology continues to evolve, peoples’ perceptions of a cashless society are getting closer to reality. Some people fear that a cashless society might have a detrimental effect on many of today’s civil liberties that we currently enjoy. For most people though, the advance towards a cashless society is wholeheartedly embraced.
By: Martin Mcallister
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Read more on A Cashless Society: a Future of our Own Making…
Filed under Finance by on Dec 19th, 2009.
Originally, building societies were set up to enable each of their members to purchase their own home. All the members basically pooled their savings and when the last member had a house the building society would be dissolved. This changed in the early 19th Century when building societies started offering new members the opportunity to save and buy a house on a continuous basis, and as a result building societies effectually became permanent institutions.
Over the years building societies have been offering more or less the same financial services as banks to such an extent that there is now very little difference between the two.
So which is best, building society or bank?
This isn’t an easy question to answer for obvious reasons. Each building society and bank has to be assessed on its own merits for the products they are offering. For example, some financial institutions may offer you a better short term deal on one product in order to attract you as a customer, but the long term scenario can be very different. At the same time it doesn’t follow that because they offer one good product that their other products are necessarily a good deal too.
Also, as banks are trying to please their shareholders they are often under pressure to hike up their prices for better profits, whereas building societies are not structured in the same way and can offer a lower price long term, particularly as they do not have to dish out dividends to shareholders.
However, banks will often appear as a “best buy” simply because of the attractive deals they can offer new customers. On saying that, building societies and banks are so similar nowadays that many people are not even aware of whether a particular institution is in fact one or the other. This of course hasn’t been helped by the fact that in the last few decades many building societies have become de-mutualised and have actually converted into banks.
A recent survey by fool.co.uk revealed that most people would really prefer talking about their financial circumstances with a building society rather than a bank and would also prefer to have a mortgage from a building society, indicating that there is a higher degree of trust with building societies. However, best buy tables seem to indicate that banks actually offer a better deal in three specific areas and these are credit cards, savings accounts and mortgages. Naturally, the building societies would disagree and with good reason too.
The recent difficulties with banks like Northern Rock have resulted in many people losing faith in banks so they are turning to building societies instead. Trust is a key area for both building societies and banks because once they have your custom and your trust; you are more likely to turn to them first for any other financial services you might need.
As with everything else these days, and especially in these difficult economic times, it pays to shop around for a particular product as these will vary quite significantly from building society to building society, just as they do from bank to bank.
By: Tim Carr
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Filed under Finance by on Dec 28th, 2008.