Glossary: Identify theft
The theft of personal information such as name, address, phone numbers, bank and credit card account numbers, driving licence or national insurance number in order to steal a person’s “identity”. Identity theft then usually results in money being stolen from the victim’s bank account and savings, or the criminal running up enormous credit card bills, obtaining passports and other official documents such as birth, death and marriage certificates in their victim’s name. The National Fraud Authority estimates identity fraud affects more than 1.8m people in the UK every year at a cost of £2.7bn.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.