Selling your endowment policy 'could provide a financial cushion'

Britons have an estimated 38 million unused credit cards lying around with a combined credit limit of £200 billion, new research has revealed.

Almost one in ten consumers admit they have as many as four credit cards which they no longer use, while seven per cent have five or six stored away, the survey by uSwitch.com found.

Louise Bond, personal finance expert at the website, said with unemployment and the current credit crunch, it is no wonder why some people feel they should hang on to their credit cards, in case they need a financial cushion.

There could be other ways to make a household more monetarily stable. Britons who have already considered raising money through surrendering their unwanted endowment policies may not realise that they could get more than their insurance company could give them by selling their policies on the secondary market to firms such as aap.

When broken down, credit card hoarders have an average £11,969 to dip into should they find their household income is reduced, or an unexpected large expenditure is required.

"Hoarding as many as six unused credit card accounts is excessive. It is a problem for both the credit card industry and individuals," Ms Bond said.

"In recent years, we have seen providers close down these accounts or, in some cases, introduce a fee for consumers that don't use their credit cards."

Many Britons may be holding on to credit cards as a financial safety net should an unexpected event occur, such as redundancy.

With recent figures from the Office for National Statistics showing that UK unemployment continues to rise, having a spare credit card may give some consumers peace of mind.

However, consumers should be cautious of returning to credit in order to give them the financial security they are looking for in case household income drops in the future and they cannot pay off the balances.

For those Britons who have already considered disposing of their unwanted endowment policies - and may have decided to surrender them - there could be another way.

A spokesperson for aap - the UK's biggest buyer of endowments - said that selling a policy on the secondary market could give people a financial cushion they are looking for. Some of aap's customers have already sold their underachieving endowments to meet debt management commitments.

He added that if aap decides to make an offer on an endowment, it will always pay more than the surrender value.


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Selling your endowment policy 'could help meet debt management needs'

An increasing number of Britons are defaulting on their credit card repayments, numerous sources show, a problem which could be compounded by the current unstable job market.

The Organisation for Economic Co-operation and Development has raised concerns about the financial state of Britain, with many UK families struggling to meet their personal debt commitments.

Chris Radford, chief executive officer (CEO) for aap - the UK's biggest buyer of endowment policies - said that some of its customers had sold their unwanted endowment policies for their household debt management needs.

Finding the money to clear credit card debt could be a wise option. Speaking to the Daily Mail, Peter Sargent, a partner at insolvency specialists Begbies Traynor, said some families have no savings to fall back on when times get tough.

"More and more people are staring financial ruin in the face. The number defaulting on their credit-card debts is growing and therefore the number of personal insolvencies will grow over the next two years," he told the newspaper.

He said when individuals are in stable employment the prospect of clearing personal debt may not be as daunting, "but if they lose their job they've had it".

Some individuals may turn to the estimated 38 million unused credit cards lying around the home, which have a combined credit limit of £200 billion, to meet their financial commitments, uSwitch.com recently revealed.

This tactic may not be a wise move to make, as this could leave people further in debt. And many consumers could be rejected from obtaining credit in the future, because of their history of defaulting. A rejected application could leave a blemish on the credit history of individuals.

Rather than relying on more credit as a financial crutch, Britons may want to assess other ways in which to clear their climbing credit card debt.

Aap CEO Chris Radford said that some of the firm's customers had sold their unwanted endowment policies to keep on top of debt management commitments.

Individuals who have already considered surrendering their underperforming endowment policies may not realise that selling it to a secondary market maker such as aap could see them obtain more cash.




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