Media Centre

Released 15th June 2010

Nearly nine out of 10 adults believe they are good at handling their personal finances - but a new study from credit card provider Capital One shows that their confidence does not always add up.1

Despite 88% of people claiming to be on top of their money the research shows they are not entirely clear about their finances and could benefit from some simple positive steps to be more in control of their cash.

Capital One's research shows half (50%) of credit card holders haven't reviewed their monthly payments or balance in the past year. That rises to 82% for people with overdrafts and to 86% for customers with personal loans, the research shows.

The study reveals that people are not taking proactive steps to ensure they stay on top of their money - 53% of consumers have never checked their credit rating, despite it being possible to do this for free.

And one in five (21%) are unaware that missing a credit repayment can harm their credit score with 25% believing that ignoring a County Court Judgment will not affect their ability to access credit.

To help consumers improve their financial management Capital One has launched its 'Credit Made Clearer' campaign, which features a series of short animated films offering practical financial educational advice.

Dr Jonathan Henderson, consumer psychologist, comments: "This is a classic manifestation of the 'ostrich syndrome', where people choose an out of sight, out of mind approach to their finances where the less you know, the less there is to worry about. Often people kid themselves they're in good financial shape but in reality it's a different story, which is only revealed when bigger problems occur further down the line."

The 'Credit Made Clearer' films encourage consumers to visit the Capital One website where they can access additional myth-busting content, helpful money management tools and information about the rate-reducing Progress card, which rewards customers who manage their account sensibly by reducing their interest rate. Capital One's Progress card is aimed at consumers who have some history of managing credit but who may have missed payments in the past and as result may have struggled to secure lower interest credit in the current economic environment. The card is intended to give them the opportunity to automatically move to a more competitive rate and help them improve their credit score.

Commenting on the new campaign Brian Cole, Managing Director, Capital One said: "It is encouraging that consumers believe they are on top of their finances but perhaps they need more support in order to ensure they do not make avoidable mistakes. We hope that our approach, which combines animation and humour, will help more people to think about their finances and take simple positive steps to improve them."

For a taste of this campaign, please go to www.capitalone.co.uk

Notes to Editors
1 ICM Research conducted amongst 2000+ UK adults on 6 June 2010.

Released 21 October 2010

 

Financial expert challenges Brits to change their ways and save up to £1,200 per year during the Credit Crunch

 

New research out today reveals that UK consumers could collectively save more than £14bn between now and 2012 by adjusting personal finances to cope with the new market conditions. By taking a few simple measures to put their house in order, the average Brit could save up to £1,200 a year.

The report, commissioned by credit card company Capital One, investigated the impact of spiralling prices on consumers, and the costs of different coping strategies that people have adopted.

Four distinct types of person emerge, grouped by their financial reaction to the changing conditions, and it's possible to calculate the gap between how the best and worst prepared Brits will fare over the coming years. This gap - over £1,200 per year has been dubbed the Cash Chasm. Those who don't adjust could be exposed to an extra £2,532 per year, whereas those who take action could limit the cost to about £1,200 per year.

The four behavioural groups range from those who don't even open bills to those who have made extreme cutbacks to their lifestyle.

The four types

Credit Cruisers

• Always on the lookout for their next 0% deal
• Use credit to top up their lifestyle, but don't worry about the balance because it's 'free money (0%)'
• Low / negligible savings
• Susceptible to "bargains" e.g. BOGOFs, free starter with any main meal

Financial Fixers

• Use credit cards for ease, emergencies and treats
• Plan their money and pay off some of the balance each month
• Too busy to chase the latest deal - would rather enjoy their free time
• Manage their money so bills are taken care of, but they can still have a treat

Debt Deluders

• Know that their money is a mess and things are getting worse
• Don't open the bills - it's easier not to know
• Don't switch, cut back or do anything - in denial
• Shop in the sales to "save" money

Cutback Kings

• Cutting back everywhere - gas / electric, clothes, entertainment, food
• Saving for trouble ahead, anticipating redundancy / reduced income
• But, too much cutting back makes them more likely to 'binge' spend
• Religiously pay-off their credit card and other debts
  
  

The best prepared are Financial Fixers, those who control their spending and have taken steps to lock down their costs. They clearly enjoy a significant cost benefit by being sheltered from wild price rises.

	Population %	Real cost of living rise - 2009	Cumulative Cost to 2012
Financial Fixers	9%	£1,296.60	£4,325.25
Cutback Kings	45%	£1,432.30	£4,777.90
Credit Cruisers	31%	£1,743.88	£5,817.30
Debt Deluders	14%	£2,532.90	£8,449.33

Capital One commissioned the report to gauge the impact and appetite for fixed rate credit card deals, which can give consumers greater peace of mind about their finances during the credit crunch. Significantly, Capital One is now introducing a new fixed rate card that offers one low rate of interest at 8.5% p.a. on purchases and balance transfers, guaranteed until 1st August 2012 (8.5% APR typical variable). There is no fee to transfer a balance from another credit card.

Srini Gopalan, Head of Capital One in the UK said: "This new card offers customers great value and takes away the headache of avoiding higher rates when an introductory rate expires. At a time when prices are going up everywhere, we want to offer our customers the certainty of knowing that the cost of any purchases and balance transfers will stay the same until 2012."

While the different groups exhibit vastly different habits the report concludes that all four groups need to adjust their behaviour to cope with rising prices and the new rules of personal finance.

Financial expert, Cesarina Holm-Kander, said: "The new economic conditions means there are new rules in the world of personal finance. The era of easy credit is drawing to a close and the head-in-the-sand approach is a non-starter. The good news is that those who take action now might actually be better off in the long term by introducing sound financial planning to their life. The bad news is that those who continue to ignore the warning signs are in for a shock if and when things get even worse."

Tips for coping with the credit crunch

1. Rocketing prices means that the key to managing costs is to fix whatever costs you can, whether it's your mortgage, credit card or gas and electricity bills
2. Look for ways to cut back. With tough times ahead, adopting sensible spending habits now will allow continued enjoyment without noticing the financial pain
3. When bills come in, pay them at once. Late payment charges are easy to avoid and you'll know right away what's left in your budget.
4. Spend wisely. Don't buy things just because they are cheap - buy them because they are needed
5. Budget ahead. Work out how much money there is for the fun things in life AFTER paying your rent, mortgage, bills. Fixing costs can really help with budgeting

For further details, please contact:

Sally Camm / Becky Paterson
Capital One
0115 843 3676 / 6484

Eddie Buckley
Lexis PR
020 7908 6515

Notes to Editors

1. Product terms and conditions:

Guaranteed 8.5% p.a. fixed rate on balance transfers and purchases until 1st August 2012. Credit available subject to status and conditions. New customers only. From 1st August 2012 your rate for purchases and balance transfers may change. 8.5% APR typical variable.

2. About Capital One:

A Fortune 500 company, Capital One Financial Corporation trades on the New York Stock Exchange and is included in the S&P 100 index. Headquartered in McLean, VA, Capital One is a diversified financial services company whose principal subsidiaries, Capital One, N.A., Capital One (USA), N.A., and Capital One Auto Finance, Inc., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients.

Capital One's subsidiaries collectively have approximately 44 million customer accounts and $130.3 billion in managed loans. Capital One has won numerous industry awards for its products and services as well as accolades for its consistent work within the communities in which it operates.

In 1996 Capital One launched its first overseas operation in the UK offering credit cards and savings products to UK customers. The UK headquarters and operations centre for Capital One (Europe) plc is located in Nottingham.

Capital One has consistently provided market-leading consumer-lending products to its customers. In the UK Capital One was among the first credit card issuers to offer a 0% introductory purchase rate, combining this with one of the lowest 'go-to' rates on the market.

Capital One is authorised and regulated by the Financial Services Authority.

3. Methodology

• 1070 UK adults were questioned about their personal finances between 24 - 30 September 2008
• The data was analysed and grouped by Redshift Research to identify four behavioural groupings based on their responses
• On this basis, it was calculated that each group has incurred the following monthly loss as a result of rising prices and the credit crunch:

• Financial Fixers - £103.20 (9% of the UK population)
• Cutback Kings - £114.00 (45% of the UK population)
• Credit Cruisers - £138.80 (31% of the UK population)
• Debt Deluders - £201.60 (14% of the UK population)

• This data was then multiplied by 12 to create a projected annual 'cost'
• Annual inflation of 4.5% (source ONS report September 16 2008) was then applied to these figures to project a year-on-year 'cost' up to 2012, based on the same level of inflation
• The 'Cash Chasm' figure is taken by comparing the 2009 'cost' figure of the group with the 'best' financial behaviour i.e.

• Financial Fixers - £1296.60

with that of the three groups with the 'worst' financial behaviour i.e.

• Cutback Kings - £1432.30 (difference = £135.69)
• Credit Cruisers - £1743.88 (difference = £447.28)
• Debt Deluders - £2532.90 (difference = £1236.30)

• The 'cost difference' between each of the groups was then multiplied by the proportion of the UK adult population aged 18-65 (total 38,386,400 - source ONS) as follows:

• Cutback Kings - £135.69 x 17,273,880 = £2,343,913,505.86
• Credit Cruisers -£447.28 x 11,899,784 = £5,322,516,347.87
• Debt Deluders - £1236.30 x 5,374,096 = £6,643,981,986.97
• TOTAL = £14,310,411,840.69

Capital One has launched its best ever fixed credit card deal, offering a low rate of 8.5% on both balance transfers and purchases, guaranteed until summer 2012.

The new product is designed to offer customers simplicity and peace of mind by giving them a single, low fixed interest rate on purchases and balance transfers that stays the same until 1 August 2012. Customers can be reassured that all their new purchases will be charged at a highly competitive rate until summer 2012 and they don't have to worry about their rate increasing.

Srini Gopalan, Head of Capital One in the UK said: "This new card offers customers great value and takes away the headache of avoiding higher rates when an introductory rate expires. At a time when prices are going up everywhere, we want to offer our customers the certainty of knowing that the cost of any purchases and balance transfers will stay the same until 2012."

In summary, the features of the new Platinum card are:

• 8.5% p.a. on balance transfers and purchases guaranteed until 1 August 2012
• No balance transfer handling fee
• Free identity theft service with a named advisor to assist
• A low 8.5% APR typical variable
  
  

Notes to Editors

 

Product terms and conditions:
All applicants must be aged 21 or over, resident in the UK and receiving an income of more than £10,000 per annum. Credit is available subject to status and conditions. New customers only. From 1st August 2012 the rate for purchases and balance transfers may change.

Capital One advises caution over unused online registrations in the fight to combat identity theft

Capital One is today launching an appeal to internet users across the UK to protect themselves against identity theft by performing a clean up of all unused and unwanted online registrations. They are advised to check which accounts they still use and cancel those that they don't. The appeal comes after research, commissioned by Capital One, revealed that in the UK alone, there are over 296 million unused and uncancelled registrations, accounts and subscriptions languishing on the world wide web - that's over 9 accounts for each adult internet user in the UK.

Many online registrations and accounts require personal information such as names, addresses, dates of birth and telephone numbers, which could be used by fraudsters to steal identities.

On average, the services that have been set up - but forgotten - by internet users in the UK - include:

• accounts on social networking sites
• online subscriptions to magazines and newsletters
• registrations to shopping or auction sites
• registrations to online services such as estate agents or wedding sites
• email accounts
• subscriptions to listings and venue newsletters
• accounts on photo sharing sites
• online dating site accounts

Reasons why subscriptions remain open

In total, over 4.7 million internet users have no idea how many online services they have signed up for. Two thirds admitted to not actively closing down registrations that they no longer use, and a third claim that they found the process 'difficult'. However, the main reason given for not closing accounts was that the user had 'become bored and was no longer interested in that particular activity' (35%). Over a quarter of respondents had simply 'forgotten' about the account and 25% had moved on to other sites without cancelling original registrations.

Forgotten for years

In some cases, these online registrations and accounts have remained unused and unchecked for up to two years (18%). The research also shows that there are around 450,000 internet users with at least one online account that has remained open but unused for 10 years or over.

Srini Gopalan, Head of Capital One in the UK commented, 'The internet offers so many useful services, enabling us to stay in touch, go shopping and share information, that it's easy to get carried away. Users can lose track of the information given out online and that's when they run the risk of their personal information falling into the hands of identity fraudsters.'

He added, 'The safest way to interact online is to reduce the amount of unnecessary personal data held and this means deleting registrations that you no longer use. We'd also recommend keeping an eye on your credit file, so you can spot when your details have been used.'

Let's not make it easy for identity fraudsters

Professor Martin Gill, Director of Perpetuity a spin-out company from the University of Leicester added, 'By obtaining somebody's personal details an identity fraudster can apply for credit cards, loans and other financial products in that person's name, and they may not find out for ages. The troubling thing is that fraudsters say that it is easy, and we can all play a part - by looking after our personal details - in making it more difficult for offenders. '

Yet, whilst half of those questioned claimed to be concerned about possible security risks, nearly 40% claimed that they simply didn't care if their details were stored all over the world wide web, potentially exposing themselves to identify theft, unsolicited spam and targeting by fraudsters.

Capital One's free Identity Alert service

The Capital One Identity Alert service, the first of its kind to be offered free in the UK, provides an early warning system for Capital One cardholders that will alert them by email to any key changes on their credit file. The alert includes details of any applications for credit that may have been made with or without their knowledge. They also receive two free credit reports each year. The service, provided by Equifax, one of the UK's leading credit reference agencies, is free and available to all Capital One customers - all they need to do is register online.

The new Identity Alert service adds to Capital One's existing security measures - including offering advice to help prevent, spot and resolve identity theft and a named adviser to provide confidential help at every stage of the resolution process if a cardholder discovers they have been a victim of ID Theft.