Credit crunch lessons lost on Brits

Brits are ‘budgeting blind' through the credit crunch, according to new research from Norwich Union. Despite spending millions of hours researching financial products, most Britons have little idea about what more than half of their hard earned cash is buying.

The research shows that despite the growing list of high profile credit crunch casualties splashed across the headlines every day, Brits are failing to look after their own finances. The UK's largest insurer found that despite 53p in every £1 being spent on financial necessities such as insurance and mortgages:

72% don't know what type of mortgage they have (tracker, fixed rate, etc.)
67% don't know what their monthly mortgage payment is
78% don't know the interest rate of their mortgage
59% don't know the basic details of their contents insurance policy
One in ten (9%) don't know how much their utility or council tax payments are

The study also revealed that Britons spend 180 million hours each year researching essential financial purchases suggesting that the more time we spend researching our financial purchases, the less we know about what we end up buying.

Commenting on the findings, independent financial expert Alvin Hall said: "In difficult economic times like today, it's crucial that each of us understands exactly where every penny of our pound is going. Budgeting blindly or with your head buried in the sand is a high risk strategy.

"When you're embarking on financial commitments like insurance and mortgages it's important to be aware of what's going on in the market and what other products are on offer. However, for many of us there's a two-part barrier to understanding financial products and making the best decisions about them. The first is the language barrier - the legalese and jargon. The second barrier is emotional - we have preconceived ideas about the complexity of these products and we are spooked before we even start our research.

"By taking some time to diligently read and understand the information about different products, and by asking questions that help clarify our understanding, we can empower ourselves to make the right decisions. And remember: don't buy anything unless you know exactly what you're getting."

WHERE DOES ALL THE TIME GO?

The Internet has revolutionised the way the nation spends money on ‘money', with 36% of respondents citing the web as their first port of call for information on mortgages, followed by independent experts (22%) and direct suppliers such as banks (12%). One in four homeowners spend more than 15 hours finding the right mortgage deal.

More than three quarters of car insurance buyers (76%) go online before they buy, with 39% spending four hours or more searching for the right policy. Despite this, the majority of homeowners and motorists remain unaware of the detail of their most significant financial commitments.

Steve Genders, head of web at Norwich Union, says: "It's clear from the research that the more time we spend researching, the less we know about what we're buying. People need quality - and not necessarily quantity - searches."

The research comes as Norwich Union, part of Aviva, launches a pioneering way for motorists to purchase their policy with greater confidence. The insurer has launched a new, one-stop-shop web and phone service that gives customers the prices and policy details of its rivals - even if they're cheaper.

Customers seeking a motor quote on norwichunion.com will be offered a simple and transparent way to check the insurer's motor policy cover and price against its competitors. Quotes are checked against other insurers to give buyers an instant and easily understandable idea of the deals on offer.

Steve adds, "We know that our customers are concerned about how much their policy will cost, whether the level of cover is right for them and that the price quoted is competitive. Our new online offer will do just that - allow them to check like-for-like policies so they can buy with confidence. No smoke and mirrors. No information overload. Just straightforward, transparent information that saves them time and confusion."