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Your Money, Your Way

Wouldn’t it be great if you could apply for a loan without worrying that one mistake or debt from years ago is going to prevent you getting some extra money?

Banks and the majority of finance companies only make decisions based on your credit score. This magic number – which not enough people know, or want to know – is the only number that matters to most financial companies. We don’t think that’s right or fair.

A system where the deck is always stacked against you

Credit scores prevent too many people from accessing finance that they are perfectly able to manage and afford. In the building where we are based, there’s an entrepreneur – let’s call him Dave – running a successful company, with investors, paying customers and staff. But Dave can’t get a loan. He pays himself a decent salary – not a huge amount, but enough to live in London, and all he wants is a small loan to consolidate some debts and buy some new furniture.

Unfortunately, when Dave was a student, he got a credit card. Then another, then another. Five in total. Most students have more than one card and overdraft. Being a student is expensive, and banks advertise at them aggressively to take out as much credit as possible. Banks love students. They spend as much as they can, but rarely pay off a card or overdraft in full so that they can make money off them for years afterwards.

He was bombarded with free offers, and the credit cards were ridiculously easy to get. He did keep up all the repayments, except for one card – unfortunately forgotten in a move to London. It had a small unpaid balance – only £50.00.

It took a while for the demand letters to catch up with Dave. Once they did, he paid the balance, including the arrears, but the damage was done. The unpaid card left a black mark on his credit file for six years, making it impossible for him to access low rates in the meantime. His issue wasn’t the debt; it was that he never would have signed up for so many student cards if it wasn’t for aggressive targeting, easy applications and free offers. As a young student, he wasn’t mature enough to realise the long-term impact of these offers.

Banks stack the deck against those who need access to finance the most and credit scores are one of the main ways they screw people over.

A fairer system, with Credit Unions

Credit unions need to make responsible financial decisions, which means they need to factor in the results of a credit check. However, this isn’t the only way they judge loan applicants.

When you apply through FairQuid, they take your employment history and salary into consideration, alongside affordability. One black mark on your score from years ago isn’t going to prevent you getting a loan. Employment history – such as whether you’ve been with your current employer for a year or more. This shows positive financial behaviour, stability and your ability to earn a living. People, not algorithms decide if you can get these loans.

Loan payments come directly from your salary, which means they take the affordability of this into consideration too. No responsible lender should ever provide credit you can’t afford. Loans through credit unions also automatically include a savings account, which means, over time, your financial health keeps getting better.

Now is the time to take control of your finances, with FairQuid: Your Money, Your Way.

Find out more and apply here.

Broken Heart, Broken Credit: Making Sense of Credit Scores

Loans, store cards, credit cards and mobile phone contracts seem like a great idea when you are in a happy relationship.

But when things go wrong, which can happen at any age, monthly payments can turn into hazardous liabilities that can trip you up years later. Taking out credit – which includes phone contracts – for someone else is always risky, even when you are married.

Even if someone else is giving you the money to cover the payments, the debt is still yours. You are legally responsible. One such example is a guy who used his good credit score to get a phone for his girlfriend at university. Let’s call him Andrew. He took out a 12-month contract for her, but six months later, they broke up, and both of them moved to different flats.

A Series of Unfortunate Events

All of the bills were going to their former address. He didn’t change the billing address, and she stopped paying him. He wrongly assumed she would take over payments – which anyone can do, even without access to the account or needing to pass security questions. Maybe she did for a while, but at some point, she stopped paying, and he wasn’t paying anymore.

It took another six months for the debt to catch up with Andrew. When it did, it was over £150, including late payment charges and collection agency fees. He paid it and assumed the situation was dealt with. It was hard enough breaking up with his girlfriend, never mind the added pain of paying off her phone contract.

He was wrong to assume the debt situation was over.

Six years later, after climbing his career ladder, promotions and stable employment, Andrew’s credit has finally recovered. It has taken six years of being careful with money and not being able to get much credit for the one ‘black mark’ to stop affecting his ability to get loans, credit cards, store cards and a mortgage.

Making Sense of Credit Scores

Andrew is not alone. Millions of people – for one reason or another – have limited access to credit as a result of bad scores preventing us from accessing finance many of us can, on current salaries, easily afford.

For many people, credit scores are like a black box. Black boxes constantly record numerous data inputs on planes. In the same way, credit reports record data from numerous sources: our bank accounts, credit cards, phone companies, utility companies, store cards, mortgages, and any applications to apply for more credit.

Most of us don’t know our credit scores. However, you can find out easily enough – using ClearScore (free), Experian (free trial – but remember to cancel) and other free tools. But if you don’t know, yet want to apply for something, such as a loan or credit card, you run the risk of damaging your credit further thanks to marketing from banks and other companies that suggest you will be successful.

Aggressive tactics and offer target those most vulnerable, and more likely to need credit quickly. When people are denied, it can be tempting to try payday lenders, and others that offer money at an extortionate rate. When your credit has been damaged, but you are rebuilding, and in steady employment, payday lenders should not be your only option.

There is an alternative solution, thanks to FairQuid: Your Wages Your Way. If you’ve been employed for at least one year at your current employer, you can apply for a loan through credit unions that take employment history and salary into consideration.

We don’t base everything on credit scores. You also get an automatic saving account as part of this loan: starting from a minimum of £10 per month, with payments for both coming directly from your salary, making budgeting easier. All your employer needs to do is verify your employment and adjust your payroll if you are approved. It doesn’t cost them a penny. Find out more and apply here.

Your Wages Your Way

Worrying about money is a horrible feeling. It stops people sleeping at night. It grips you in the pit of your stomach. Money worries can get in the way of even the brightest summer day.

No one wants to worry about money, but even those who earn decent money – or at least have a stable job – can find themselves in a tricky position. In the UK, average household debt is around £13,000, and around 70% of us have no savings.

So it doesn’t take much to unsettle most people finances: A boiler breaking, car fails an MOT, an expensive month with too many Birthday’s, not to mention, for families, Christmas and the Summer Holidays.

The problem is, banks aren’t always willing to lend extra money when someone is in a tight spot. Banks assess whether they can lend based on credit scores. When applying for a loan, overdraft extension or credit card, it doesn’t really matter what you say. That is one reason you can apply online without speaking to anyone these days – people don’t decide who gets money anymore, algorithms and credit files do.

If you have a good credit rating, then getting access to a little extra money – or having that money (or credit) already available shouldn’t be an issue; but we know this isn’t always the case. Not everyone has an ‘excellent’ credit score.

Millions of people are stuck in ‘persistent debt’, paying off old credit cards, loans and overdrafts. And then there are others, whose credit files are still affected by acts of kindness that get turned into bad debts, such as when people get phones or loans out for other people who then don’t pay, or move away.

Bad credit scores still penalises people who have steady jobs and salaries that cover all their costs, except for unexpected bills and other expenses. You shouldn’t have to turn to payday lenders to rescue you from a tight spot.

There is another way. For anyone who’s been employed at least one year with their current employer, you can – through credit unions – get a loan that should pay off any current debts and help you start to build up some savings.

All you need is your employer to verify your employment. If you are accepted for the loan (which comes with an automatic savings account – starting from a minimum of £10 per month). People, not algorithms decide if you can get these loans. Loan and savings payment come straight from your salary every month, just like Ride to Work schemes, travel and childcare schemes and other salary deductibles (council tax).
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All your employer needs to do is verify your employment and adjust your payroll if you are approved. It doesn’t cost them a penny. Find out more and apply here

FairQuid: Your Wages, Your Way.

High Rents Negatively Impacting Recruitment and Retention

Living in London is always going to cost more than anywhere else in the country. Capital cities attract more people, more opportunities and, therefore, are more expensive places to live, travel around and enjoy.

But in the last decade, many people are starting to question whether the cost of living in big cities, is simply too high?

London is Europe’s largest metropolis, responsible for 22% of the British economy, with employees in and around the capital paid 29% more than the rest of the country. And yet, the cost of renting and buying a house is prohibitively expensive compared to anywhere else in the UK. Although other large cities, such as Liverpool and Manchester, are rapidly creeping up in price too, partly in response to the rising costs of living in London as people move away to previously cheaper areas.

Mind the Gap

According to Zoopla, the average cost of renting a one bed flat is £1,690 a month, with rent absorbing at least 52% of pre-tax earnings. Other cities, such as Liverpool and Manchester are also more expensive than the rest of the country, with rent higher in areas near major commuter routes, such as Merseyrail in Liverpool. Manchester – which some are now calling the ‘London of the North’ is witnessing London-style price rises for property, with the city experiencing a 20% increase in recent years.

These high costs are even worse for younger employees and graduates, often forced to live in cheaper accommodation, sharing with several others; with them at risk of falling prey to slum landlords and those willing to exploit desperation. Some landlords charge around £500 for beds in kitchens, living rooms, even cupboards and sheds.

House prices are also a lot cheaper, with the gap between London and the rest of the country at £300,000, according to recent figures. In 20 years, property prices have gone up 450% – on average – with Westminster and Hackney increasing around 700% since 1996. It is no surprise that there are now more renters than owner occupiers in the capital.

How High Rental & House Prices Are Impacting Employers

According to employer data from Grant Thornton, the accountant, seven of ten are worried about the cost of rent and housing preventing them from attracting the talent they need. People will always come to big cities for opportunities and advance their career, but if the cost of living is excessive, graduates and younger staff – and anyone without money in the family or substantial savings – may look elsewhere.

Some companies, including KPMG and Deloitte – both big four accounting firms – are now providing accommodation for graduate employees.

Deloitte provides a campus atmosphere, with room prices between £180 and £220, after-work activities organised and travel is only 30 minutes to the office. Far better than staff commuting from outside London, taking multiple trains or buses, or paying £700 for a living in a shed someone’s garden. KPMG makes introductions to private banks, making mortgages far more affordable with lower rates.

Unfortunately, not all organisations can afford to subsidise accommodation or make introductions to private banks to guarantee favourable rates. Even when staff are paid well, saving for a deposit and one or more months rent in advance is expensive. When rents are higher, so are the other associated costs. Buying is even more expensive and, therefore, unrealistic. Staff living in cold and uncomfortable accommodation might stay in the office longer if only to stay warm, which negatively impacts productivity.

One way to support staff in large cities, if you don’t have the resources of a big four firm, is to offer employee benefit loans. It won’t cost you anything, but through credit unions, your team can access loans that would make a deposit more affordable. Make city living more affordable for your staff. Our employee benefit loans and savings accounts, provided by ethical credit unions, are the answer. Find out more.

Money and Mental Health: More Closely Linked Than You Think

Mental health awareness is at a tipping point. More people than ever are talking about mental health, sharing stories, seeking help and realising that the stigma around it needs to be broken.

Celebrities and royals are making a significant contribution to changing the national dialogue on this subject. Only recently, Prince Harry and the Duke and Duchess of Cambridge launched the Heads Together campaign, alongside national mental health charities. As part of raising awareness, Prince Harry finally spoke out about his grief over losing his mother, Diana, Princess of Wales in 1997, when he was a child.

Heads Together also enlisted celebrities, including Lady Gaga, Professor Green, Stephen Fry, Rio Ferdinand, comedian Ruby Wax, and former England cricket captain, Andrew Flintoff. Other celebrities, from the boxer, Frank Bruno to Benedict Cumberbatch have also spoken openly about everything from depression to bipolar and other mental illnesses, all supporting the movement to break through the stigma.

Men, in particular, can’t afford to stay silent when they are struggling. Suicide is the biggest killer for men under 45. Money, especially when you don’t have enough, can play a huge role in anyone’s mental health.

Overburdened with Debt

Not having enough money, those stuck in persistent debt, or being hit with an unexpected bill – boiler or car breaking – can negatively affect people’s mental health, making it harder to focus on work and manage your finances.

Right now, average household debt is over £13,000 (which includes student loans but does not including mortgages). Recent figures from the Bank of England show unsecured consumer debt – credit cards, loans, overdrafts, car finance and second mortgages – now totals £240 billion.

Some people can more easily afford debt, can juggle credit cards without worry. But not everyone can. Within this massive national debt, there are 3.3 million customers paying £2.50 for every £1.00 borrowed, according to the Financial Conduct Authority (FCA). The FCA wants the financial sector to tackle this issue, to help those with too much debt, but enforceable guidelines won’t come out until 2018.

At the same time, not enough people are saving money. According to debt charity, StepChange, if every household had £1,000 as a rainy day fund – which is less than the three to six months financial experts recommend – it would reduce the risk of 500,000 families falling into short-term ‘problem debt.’ Despite this sound advice, less than 40% have £100 set aside and around 70% of households don’t have a full £1,000 set aside.

Money and Mental Health

Studies show that worrying about money reduces mental capacity, comparable to losing 13 IQ points. Trouble concentrating is a clear sign someone is struggling with their mental health, which is made worse – or could be caused by – financial stress.

Exhaustion, irritability, poor diet, too much or not enough sleep are other signs that someone needs help or would benefit from talking about their problems. Anxiety and stress can also present as physical symptoms, including shaking, sweating, nausea and panic attacks. Sometimes speaking to a loved one, a friend, colleague or therapist can make all the difference.

Taking action, to get finances in a better position is equally important. Whether that means borrowing from friends or family – or your employer if they offer employee benefit loans – or saving some money after incurring an unexpected bill would help avoid a similar situation in the future. Banks, credit unions and various charities offer financial advice counselling, which can help; but for many people, talking to others and taking action is the most effective way to turn a financial problem around.

Need mental health help now? Numbers to Call:

Samaritans: 24 hours a day, 365 days a year. Call (FREE): 116 123 (UK) or 116 123 (ROI)

MIND, the mental health charity: Website or call 0300 123 3393

Rethink Mental Illness: Website or call 0300 5000 927

Sick of Walking a Credit Card Tightrope?

More than 5 million British people have credit card debt that they won’t clear in full for ten years. Some consumers are paying £2.50 for every £1.00 borrowed, which is concerning enough that the Financial Conduct Authority (FCA) is going to make banks take action.

Credit cards are everywhere. In the UK, we are top of global league tables for credit card ownership, according to Kantar Media TGI research, with 73% of the population owning at least one credit card. Sixty percent of people pay the balance in full every month, with average credit card users only accessing 7% of the available funds. Some even play one card off against another, making more money than they pay in charges.

However, not everyone has the funds or ready access to credit facilities to juggle cards and pay balances every month. But that hasn’t stopped credit card companies targeting people – even those who can’t afford it – with offers to transfer a balance to a card with 0% interest.

With average household debt around £13,000, we have to wonder if the financial sector is once again following a dangerous and irresponsible path? What about consumers: Are people aware that alternative options exist?

Making Sense of 0% Balance Transfer Offers

Credit cards are useful when they can be paid off quickly, or when you are only using them for small purchases. But for the 3.3 million people paying more in interest than the outstanding balance, banks are earning a considerable profit from those customers. Hence FCA concern; although, action to help them may not come into force until 2018.

We need to remember that banks can’t stop people from spending. All they can do is offer advice, guidance and ensure customers understand their options. It could be said that many are failing in this area, especially when offering someone a 0% credit card balance transfer.

Offering a customer a new credit card, with a long zero-interest rate period (up to 40 months, or more) sounds like a great deal. Transfer fees are often 3.9% or less, with some free or only 1%, which is usually far less than one month’s worth of interest.

Providing someone can afford to pay the debt in full they are getting a bargain, but for many who can’t afford this, they are effectively being tricked into prolonging their debt cycle. Applicants should check they can afford the deal first, with affordability calculators on most comparison websites. Credit score tools, such as ClearScore, will also show whether you are eligible for an offer, which is worth checking, since once a credit check is done it leaves an imprint on your file, thereby reducing your score.

Not only that, but not everyone who is eligible gets a great deal. About half are offered a higher transfer fee with a shorter zero-percent interest timescale. Not everyone who gets these offers is eligible, which means applying leaves a negative impression on your credit file. The FCA has also found that 20% of people on zero-percent deal cards did not expect to pay interest on a new purchase. A classic bait and switch, with banks concealing information they ought to make clear to applicants.

A Better Alternative?

Transferring debt from one card to another is fraught with risks. Especially if you are worried about your credit score. Loans from banks are harder to get than credit cards. Thankfully there is an alternative. With FairQuid, you can take out an affordable loan and consolidate credit cards and any other debts.

We only work with ethical lenders and credit unions, and they use a broader set of criteria to assess a loan applicant, including your salary and number of years with your employer. Minimum eligibility means at least one year with your current employer.

Want a solution this year? Debts you want to consolidate? Or are you looking for an easy way to start saving?

FairQuid is here to help. Our loans have already made debts more affordable for hundreds of people across the UK who want to reduce their debts and start saving. Fill out the form on this page so you can ask your employer to offer this as a completely free benefit to all staff.

Living Wage & Downsizing: Fears That Keep Employees Awake At Night

In some sectors – retail, hospitality, admin and support (customer service roles) – employees often live with a fear they aren’t as valuable as more skilled workers. Changes, such as the National Living Wage – now at £7.50 for those over 25 – can cause stress and uncertainty.

As much as a pay rise is welcomed, there is always a justifiable fear that companies will need to reduce staff levels to pay more to those they can afford.

The John Lewis Partnership (JLP), owners of the upmarket supermarket chain, Waitrose, and department store, John Lewis, was one of the first companies to report a 17.4% pre-tax drop in profits as a result of a higher wage bill. The Telegraph reported that this wage bill could lead to them “employ[ing] fewer staff over time.”

The Real Risks of Downsizing

National Living Wage requirements mean that it cost JLP an extra £3 million in wages. It could cost more in the next tax year (2017-18), with the government aiming for National Living Wage to hit £9 for those over 25 in 2020.

Other retailers, pub and restaurant chains, coffee shops and hospitality groups also face rising wage costs, which are forcing some to reconsider how many staff they employ. “The British Retail Consortium has estimated that the additional cost to retailers will be between 1-3 billion pounds annually by 2020”, according to a Reuters report on this issue.

Analysts expect certain retailers, including Next, Sports Direct and Poundland – all subject to higher margin pressures than competitors – “could be hit particularly hard.” Store closures are expected, especially with 60% of retail leases coming up for renewal in the next five years. More customers are buying online, which could encourage retailers to downsize store footprints across the country.

Argos (now owned by Sainsbury’s), Debenhams and Tesco are also contemplating downsizing, partly in response to higher wage bills and other costs, which inevitably will result in some staff – potentially thousands – losing their jobs over the next few years.

The hospitality sector is set to experience the largest National Living-induced wage bill increase, of 3.4%. Companies with low prices and low margins will suffer the most, which includes JD Wetherspoon, Costa (and other Whitbread PLC brands), and other pub groups, including Mitchells & Butler, Adnams and Punch Taverns. Wetherspoon’s is expected to reduce earnings before interest and tax (EBIT) 38%, as a consequence of wages rising 10% across the chain.

Good news for employees that receive higher paychecks. Bad news for those companies can no longer afford to employ.

What Can Businesses Do?

Assuming you are affected in some way – that you also need to pay staff more since National Living Wage was implemented – you will probably already know how much more higher wages are going to cost your business. Hopefully, you can absorb these extra costs over the next few years without reducing headcount.

Sustainable growth is the only long-term way to ensure you can employ everyone and pay competitive wages that ensure you can recruit the best talent for your business. Periodically review business operations, to make sure everyone is working in a role that generates maximum value.

When employees are worried about losing their jobs, they look elsewhere, and top performers can jump ship more easily. They have skills your competitors want and need. Consequently, companies are left with mid-level and poor performers, thereby dragging down performance and productivity, or forcing managers to let them go and start hiring again for people capable of hitting KPIs. No one comes out a winner in this scenario. Hiring new staff costs more money than reassuring those who were performing well, but decided to leave as a result of a fear of downsizing.

Providing reassurance in the form of a positive action, such as employee benefit loans and savings accounts, is far cheaper – free for businesses, in the case of FairQuid – than watching your best staff leave and trying to replace them.

With heightened fears of redundancies across sectors where people aren’t paid high salaries, carrying debts around and not having any savings only makes these stresses worse. As an employer, you can do something about these issues (whilst also ensuring your staff are more productive and engaged) – thanks to employee benefit loans. Best of all, these won’t cost your business a penny. Find out more today.

Sources:

National Minimum & Living Wages: https://www.gov.uk/national-minimum-wage-rates
http://uk.reuters.com/article/uk-britain-wages-stocks-idUKKCN0WY4UE
http://www.telegraph.co.uk/business/2016/09/15/john-lewis-partnership-profits-slide-on-higher-wage-bill/

Why is British Productivity So Low: What Can Be Done?

Productivity may not sound like an election issue, but in reality, this is something the government and businesses have been wrestling with for some time. British economic output, our levels of productivity, are too low.

As a country, we are an advanced, complex, mature economy. We are innovative. Our products and services are bought across the world. However, when it comes to productivity – a way of measuring the “output per unit of input, measured per worker or by the number of hours worked,” according to economic correspondents.

Simply put, productivity is a way of showing how much money we make, as a nation, after weighing everything that goes into making those products and services. Economists include everything we produce in these figures, from accountancy and financial services to cars, wind turbines, chocolate and trains.

Mind the Gap

Compared to other advanced economies, our productivity is low. We are 30% behind the US.

Since the 1990s, the Office for National Statistics (ONS) has published an international comparison table of productivity. Between the UK and other G7 countries (the US, Japan, Germany, France, Italy and Canada), there was a 9% gap, which reduced to 4% in 2007. However, since the recession, that has increased again to 18% compared to other G7 countries.

However, within the UK economy, there are enormous gaps, between high-performance businesses and so-called “zombies”, and between different regions. London is 60% more productive than Northern Ireland, which is the least productive region of the country.

OECD research notes that fast-growing companies are more productive than ever, but there are more “zombies” – businesses that are absorbing talent and capital better used elsewhere. According to the Financial Times, this indicates that “a slowdown in the diffusion of know-how and slower elimination of the weakest competitors”, is causing a drag on the country’s economy.

What is the Solution?

Productivity affects everyone. Some areas, such as the City of London (Square Mile) and Aberdeen, home to the UK oil and gas sector, have a much higher Gross Value Added (GVA) than others. Sectors, where margins are higher, will generate larger profits (for owners and shareholders) and higher salaries and bonuses for workers, pushing up productivity.

Infrastructure also plays an important role in the productivity puzzle. Major civil projects, such as Crossrail, the Heathrow expansion, Transport for North (created out of the Northern Powerhouse initiative) and HS2, are all expected to improve economic output and, therefore, productivity. Broadband upgrades and other initiatives will have a similar positive impact.

In November 2016, Chancellor Phillip Hammond announced a national productivity investment fund of £23 billion, for innovation and infrastructure over the next five years. Expect productivity to be mentioned in the run up to the snap election in June 2017.

Businesses are also keen to improve productivity. Over the last decade, many companies have bought and implemented software and other technology solutions as a way of improving processes and producing more in the same amount of time. However, Mario Draghi, the European Central Bank’s president, has noted that too many “European companies were [still] failing to incorporate them into their operations.”

Technology is not the only solution. Financial worries – either from long-term debts or short-term emergencies – reduces productivity, since it reduces employee morale, causing absences, sick days and outward signs of stress, such as tiredness, irritability and accidents.

We also need to remember that productivity is more than a statistical breakdown of how hard we all work. How much computers and machines produce, how we are doing compared to other economically advanced countries. It is an outward sign of human satisfaction. Happier employees are more productive. Knowledge economy workers need to mentally perform at a high level, consistently, which means stress and anxiety – caused by debt, a lack of savings or retirement funds – has a negative impact on productivity, engagement at work and happiness.

Make it easier for your staff to get their finances under control. Offer them employee benefit loans, combined with a saving account. Give employees the option of taking a loan connected to their employment – contingent on years of service and performance – with repayments funded directly from their salaries. Credit ratings are still important, but finally, there is a way to ensure past financial performance isn’t the only criteria to judge future stability.

Employee benefit loans give staff with a way to consolidate debts and start putting money aside in that rainy day fund. Now that is an employee benefit your staff can take to the bank. Find out more today.

Sources:

https://www.theguardian.com/business/2016/dec/25/what-is-productivity-why-uk-poorhttps://www.theguardian.com/business/2016/nov/24/why-is-uks-productivity-still-behind-that-of-other-major-economieshttps://www.ft.com/content/ac05863e-e304-11e6-9645-c9357a75844ahttps://www.ecb.europa.eu/press/key/date/2017/html/sp170313_1.en.html

Stuck in Persistent Debt: Want a Way Out?

More people than perhaps anyone realises is stuck in “persistent debt”, according to the financial watchdog. Around 3.3 million people are stuck in a cycle of only ever paying the minimum on credit cards and loans, with more money being paid out on interest and charges than the amount borrowed over 18 months.

If this sounds familiar, then don’t worry: You are not alone. The Financial Conduct Authority (FCA) has undertaken a thorough review of financial products and found that these 3.3 million customers are paying £2.50 for every £1.00 borrowed.

Clearly, this isn’t sustainable. The debt won’t reduce when only the minimum is paid, and this cycle of bad debt is forcing people to turn to payday lenders if an unexpected bill lands on the doormat. Not only that, but there are times when someone may have a CCJ they may not be aware of, which in turn is making it difficult to consolidate debt and start saving.

Apart from winning the Lottery, there are solutions that can turn things around for anyone stuck in debt and keen to find a long-term way out.

#1: Manage your credit score

For most people, borrowing is done through high street banks, which means knowing what they know – the information on your credit file – is part of the key to unlocking how to manage your money better. There are several useful free tools around, such as ClearScore, Noddle and Experian.

Having a clear idea what is on your credit file, including any forgotten old debts or CCJs is an important first step. Next, make a plan for how you can consolidate the debts.

#2: Debt consolidation

One of the main reasons people get stuck in persistent debt is that they can’t consolidate what they owe and reduce the monthly payments. Unfortunately, trying to consolidate debts involves applying for a new loan, which normally isn’t an option when credit ratings knock people back.

However, employee benefits loans are available for anyone who has worked for their current employer for more than one year. All you have to do is ask your manager, or HR manager if they will provide these as an employee benefit. It won’t cost your employer a penny. Not one penny.

Loans are arranged through ethical lenders, for fair rates, and deducted straight from your paycheck. A small savings account is also set up, as part of the terms of getting a loan, and most people who have taken out loans are still saving, even after the loans are fully paid. Best of all, even those with bad debts or CCJs are considered. With an employee benefit loan, you aren’t just a set of numbers on a credit file. You would not need to hide having a CCJ. The lenders consider everything, including how you are performing at work and how long you’ve been with your current employer.

#3: FCA Intervention

In time, the FCA – now they understand the extent of the issue with persistent debt – might be able to help those in that situation. But we can’t hold our breath. It may take some time. Right now, they are doing a consultation paper with financial sector companies to understand how to tackle the issue, which means it could be 2018 before they have a working solution.

Want a solution this year? Debts you want to consolidate? Or are you looking for an easy way to start saving?

FairQuid is here to help. Our loans have already made debts more affordable for hundreds of people across the UK who want to reduce their debts and start saving. Fill out the form on this page so you can ask your employer to offer this as a completely free benefit to all staff.

Why Credit Unions Are The Future of Employee Financial Wellbeing

Consumers lost confidence in mainstream banks as a result of the recession. Mortgage foreclosures, PPI, tighter lending criteria and rejected loan applications crippled millions of families and businesses when they most needed help.

At the same time, governments in the UK, US and Europe were bailing out banks to the tune of several hundred billion pounds. Financial executives were walking away with six and seven-figure golden parachutes when customers were having homes repossessed. It wasn’t a good time to be in the financial services sector, and even now, we are living with the repercussions of that economic collapse. Media stories of massive RBS losses still stir up old resentments.

Banks have more competition. Customers expect more from financial providers; they expect them to make smarter, more ethical, choices. Credit Unions, now numbering 500 across the country, with over 1.6 million members, are a group of competitors that have benefited from a public unwilling to put all of their money and trust back into banks. Credit unions are more popular in other countries, with over 40% of US consumers a member of a credit union. In the UK, that figure is around 4%.

Most credit unions are considerably smaller than banks. It makes it difficult for them to make potential members aware of them. Employers could step in with a solution that helps staff and reduces stress-related absence and staff turnover, with support from credit unions.

How Credit Unions Can Solve Absence & Turnover Problems

Debt and unexpected bills reduce employee performance. Stress increases staff absence, even turnover when they are worried enough about money to look for another job.

With average household debt around £13,000, we can’t assume that banks will lend more money if an employee wants to consolidate debts, or they have an unexpected bill, and we can’t even assume that those on higher salaries save money since savings rates are so low in the UK. In case of an emergency, people are as likely to turn to payday lenders and credit cards than savings.

Credit unions have a better solution, which employers can help their staff find, through employee-benefit loans and savings accounts. Here are a few reasons why credit unions can provide an advantage for employer’s looking to reduce stress, absence and turnover amongst staff, whilst also improving long-term financial wellbeing.

1. Loans based on years in service

Credit union members can only get loans when they have been a member for a certain amount of time. When it comes to employee-benefit loans through FairQuid, credit unions need a minimum of one year’s service with an employer. This way, you can reward service with the option of loans and savings accounts from an ethical financial provider they would not normally be able to access straight away.

2. Salary and employment history influence the loan amount

Mainstream lenders don’t take this as much into consideration as credit unions that offer employee-benefit loans. The longer you work for a company, and the more you earn, the more you can borrow; generally up to £7,500.

Banks put far more weight on credit scores, which means any bad history will increase your interest rates or make an employee ineligible for a loan, even if they can afford it. That doesn’t help people who want to consolidate debts or pay for an unexpected bill, which in turn means they could take time off due to stress, suffer low productivity (financial stress can cause your IQ to drop 13 points) or start looking for another job. Consequently, productivity suffers, all as a result of something outside your immediate control.

3. Manageable affordability and savings

Anyone who gets a loan from a credit union becomes a member, which means they also need to start saving – as a result of automatic enrolment in the Membership. Since both the loan and saving amount are taken at source – the same as Tax & NI – the employee doesn’t see the money come into their account and then have to pay it out.

In effect, they don’t miss what they don’t have. This way, they adjust to the slightly lower Net salary, whilst knowing that a rainy day fund is building up and their debts are decreasing.

4. Hassle free loan applications

Employee-benefit loans also make applying for a loan far easier, since the bulk of the paperwork they need is verified through the employer. Credit unions can process applications faster. Staff who are stressing about money can have a solution that eliminates these worries quickly so that everyone can get back to work.

Need a solution that makes a real difference to your staff, without costing your organisation a penny? Debt is everywhere, but it doesn’t have to drag down your productivity. Our employee benefit loans and savings accounts, provided by ethical credit unions, are the answer. Find out more: