This week just gone has been an eventful week in the world stock markets. On Monday the stock markets were said to be in melt down as millions was wiped off the value of banks. Throughout the week the markets have been going up and down- even the plan unveiled by Gordon Brown and Alistair Darling on Wednesday was only enough to provide a brief respite as the markets rose slightly, then fell once again. The falling stock markets around the world are a symptom of the credit crunch and the low value of the markets reflect a lack of confidence in trading. However, some experts believe that it is not the fact that stock markets are falling that shows the world economy is in bad shape it is the fact that the markets are so volatile. This volatility is often the symptom of a recession, compounding the prediction of the International Monetary Fund (IMF) that the UK economy will contract by 0.1% next year.

As the markets closed on Friday afternoon the FTSE 100 (the UK’s share price index) ended at 3,932 points which wiped £91.2bn off the value of the largest UK shares. The index has fallen 21% this week - the second-biggest weekly fall in FTSE 100 history. One example of this is the value of Royal Bank of Scotland (RBS) – as the markets closed on Friday RBS shares were worth 80% less than they were a year ago.

All eyes were on the stock markets this week and it seems likely that they will continue to be next week as Brown’s rescue plan goes into action.

Let’s now review the top money stories of the past week commencing the 6th October 2008.

Monday 6th October

Fall in the sale of new cars – In September the total number of new car registrations was 330,295, which is a fall of 21.2% from September last year. This is particularly significant as September is normally a particularly busy period, normally accounting for 17% of new car registrations. The Society of Motor Manufactures and Traders (SMMT) now fears that if number of new car registrations continues to fall figures for the whole year will be just over two million, the lowest since 1996. The slowdown in the motor industry in the UK is already affecting employees as one particular plant in the south of England has moved to a four day week. If you are employed in the motor industry in times like these it is good to be prepared just in case you are affected by measures like these. Check out the Moneybasics “When things to go wrong” to pick up some useful tips on how to prepare for the worst.

Tuesday 7th October:

Investigations into energy companies –The regulator of the energy firms, Ofgem, has been investigating energy companies ever since they all raised their prices by up to 25% within weeks of each other earlier this year. Ofgem have discovered that those who pay their gas and electricity by pre-payment meters are, on average, paying £118 a year more than those who pay by direct debit. It has been estimated that there are 5.9 million people in the UK who use pre-payment meters to pay their gas and electricity. Ofgem have told energy companies that they have until Christmas to make voluntary changes to their pricing structures.

Wednesday 8th October:

Brown announces bailout –Gordon Brown announces today a £500bn plan to rescue the UK banking sector. This large amount of money will be broadly directed at three different ways of putting security and confidence back into the UK financial sector. £50 billion will be injected into banks in exchange for preference shares, which will mean that the government (using taxpayers’ money) will buy shares in banks, and if/when banks recover the government could even make a profit. £250bn of loan guarantees will be made available at commercial rates to encourage banks to lend to each other again. £200bn will be made available through the ‘enlarged special liquidity scheme’ of the Bank of England, which can provide short term loans to banks. The government hopes that this plan will go towards restoring confidence in the banks and encourage them to start lending to each other again.

Interest rates lowered by 0.5% –The Monetary Policy Committee (MPC) of the Bank of England met today and announced a day early that interest rates are to be lowered by 0.5% from 5% to 4.5%. This reduction of interest rates was seen in 5 other central banks around the world. This move, along with the £500bn plan unveiled by the government today should also go towards restoring confidence in financial markets. It could also go towards helping you if you are one of the 11.7million UK households with a tracker mortgage (a mortgage with an interest rate that tracks the Bank of England’s). However although some mortgage lenders have reduced their rates, this has not been seen across the board so make sure you check with your lender.

300,000 Icesave accounts are safe –There has been much confusion this week over the state of the Icelandic banks and what will happen to those of you that have money invested there. Yet today Alistair Darling has said that he will ensure that the 300,000 customers who have savings in the failed Icelandic internet bank Icesave will get their money back. There is also good news for the 22,000 UK consumers who have accounts with the Heritable Bank and the 160,000 UK consumers who have accounts with Kaupthing Edge, as these accounts have now been taken over by the Dutch bank ING Direct. It remains to be seen however, how the charities and local councils that have invested millions of pounds in the Icelandic banks will be affected.

Thursday 9th October

Halifax confirms house prices fell in September –Recent research by the Halifax supports the Nationwide’s analysis that house prices continued to fall in September. Halifax report that UK house prices registered a 1.3% fall in September, which means that the annual fall now stands at 12.4%, with the cost of the average home in the UK now at £172,108. However, although it has been said that the rate of the fall in house prices is starting to stabilise, obtaining a mortgage is still very difficult. Martin Ellis chief economist at the Halifax said that "the ongoing pressures on householders' income, combined with the reduction in the availability of mortgage finance mean that market conditions will remain challenging."

Paying off your credit card balance –If you are one of the many who opts to only pay off the minimum repayments on your credit card every month then you could be facing decades of debt. The price comparison site Uswitch has revealed the true extent of not paying off your credit card bill in full every month and it makes a shocking claim. Many people are aware that if you only pay the minimum repayment every month it will take longer to clear your balance as you will accrue interest. Yet did you know that if you have a balance of£1,384 on your credit card (the UK average) then it could take you until 2039 to pay it off? That’s longer than the average 25-year mortgage! All this isn’t helped as several credit card companies have lowered the percentage you can repay each month from 3% to 2.5% or even lower. The lesson to be learnt from this is to always try and pay your credit card bill in full each month. If you are wondering how long it will take you to clear your credit card balance then the Moneybasics Credit Card Calculator will help you work that out. Alternatively if you are worried about your credit card bill and feel you could be sliding into debt call the Consumer Credit Counselling Service (CCCS) on 0800 138 1111 or see their website http://www.cccs.co.uk for free, independent and confidential advice.

Prepared for Moneybasics by Joanna Parsley, Advocacy Officer (Credit Action).