Taxpayers in credit card debt warning

Credit card payments can now be made for self-assessment, PAYE, corporate tax, VAT, stamp duty and some miscellaneous payments.People can now pay their tax bill by credit card in a move prompting concerns that some taxpayers could see their bills increase significantly and risk getting deep into debt.The Institute of Chartered Accountants (ICAEW) warns that allowing people to pay their tax bill by credit card could push taxpayers into financial difficulty and see them clock up expensive debts.

However, paying by card will see you face a 1.25% transaction charge or 0.91% for self-assessment tax bills paid over the telephone.Debt charities are also concerned about this new option, as it could prove too much temptation for people struggling to pay their tax bills.Anita Monteith, technical manager of the ICAEW’s tax faculty, says: “Paying by credit card is only sensible if you have the funds to clear your credit card debt before is begins to accrue interest.”

FCAC Invites Canadians to Employ Their Credit Cards Cleverly

The Financial Consumer Agency of Canada released today the most recent update of its Credit Cards and You comparison tool. The interactive tool, which includes more than 200 credit cards, helps consumers choose the credit card best suited to their needs by enabling them to compare annual fees, interest rates and other features."In these tough economic times, some consumers will no doubt find it difficult to pay the entire balance on their credit cards," said FCAC Commissioner Ursula Menke. "Although credit cards are a very useful payment method, it is more important than ever that Canadians use them wisely to avoid accumulating further debt."

As the new year sets in, FCAC invites consumers to review their credit habits and needs by asking themselves a few questions: How many credit cards do you have? Do you know what the annual interest rate is for each one of your cards? What kind of transactions do you usually make? Are you able to pay off the entire balance on all your cards at the end of the month? Have you ever had significant credit card debts? The answers to these questions can help consumers determine what kind of card would be the most appropriate for them and how they should be using it.

BOJ Credit Measures May Help Bond Holders

Five-year notes gained and 10-year bonds pared losses yesterday, while yields on commercial paper were unchanged, after the central bank said it will consider buying corporate bonds to prevent a shortage of credit. Demand for loans among companies surged to a record this month as falling profits and stagnating credit markets left businesses with less cash to operate, a central bank survey showed.Ten-year yields last quarter fell 32 basis points, the biggest drop in four years, after the failure of Lehman Brothers Holdings Inc. on Sept. 15 spurred governments and central banks around the world to bail out financial institutions and pump cash into money markets. The global slowdown pushed Japan’s economy into is first recession since 2001.

To help loosen credit amid the slowdown, the Bank of Japan yesterday said it may buy corporate bonds with a maturity of up to one year and will start buying up to 3 trillion yen of A1- rated commercial paper of up to three-month maturity. The purchases will include asset-backed paper, or securities based on receivables such as credit-card debt.After the BOJ’s statement, yields on six-month commercial paper issued by companies with the strongest credit rating were unchanged for an eighth day at 0.725 percent. The commercial- paper index covers companies such as Nippon Steel Corp., the world’s second-largest maker, and NTT DoCoMo Inc., Japan’s largest mobile-phone operator, that have an a-1+ score from Japan Rating & Investment Information.

Rising risk aversion, the global slowdown and the turmoil in credit markets will be the driving forces behind a short-term rally in bonds, Nishioka said. Nippon Mutual Life Insurance Co., Japan’s biggest insurer, and Aozora Bank Ltd., also said government debt may gain following the BOJ’s announcement.The perceived credit risk in the financial sector was little changed yesterday after the BOJ announced its measures. The difference between the rate the government and Japanese banks pay to borrow for three months, the so-called TED spread, was at 50.5 basis points, compared with an average of 30 basis points last year, according to data compiled by Bloomberg.