Thursday, Jun 19, 2008
Paying interest to pay interest !
Daily Mail: More than 4m families use a credit card to pay mortgages
More than four million families have used a credit card to pay the mortgage or rent in the last year. The figure exposes the dramatic impact of the economic squeeze on ordinary families. Settling debts by withdrawing cash on a credit card is probably the most expensive way possible with interest rates as high as 28 per cent, and indicates a disturbing level of desperation on the part of homeowners.
Posted by uncle chris @ 08:32 AM (1025 views) Add Comment
11 Comments
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1. symo said...
You see, it's all about affordability..............................
2. tyrellcorporation said...
"with interest rates as high as 28 per cent, and indicates a disturbing level of desperation on the part of homeowners."
IMO this shows a disturbing level of financial ignorance more than anything. It is so 'normal' for people to see credit cards as a sort of magical payment device which has no real meaning. These seemingly benign decisions (to pay your mortgage with a credit card) will come back to haunt people pretty sharpish and I believe the graph curve of bankruptcies will be almost exponential by year end.
3. cyril said...
is it possible that anyone would do this for convenience? (or to make the most of an interest-free period on the credit card?)
4. harold said...
This is the logical outcome of debt-based money. We all end up in debt to those who create the money out of nothing and charge interest for the privilege of doing so. It's a system of perpetual and growing misery.
5. uncle tom said...
This is all essentially historical - before the rampant increase in food, fuel and borrowing costs has had time to hit home.
You also have to allow for the fact that people are often reluctant to admit that they have financial problems, so the true figures are probably greater.
Lends weight to my belief that a large minority of households, perhaps 25%, are in a financially critical situation - enough for a 'can't pay, won't pay' movement to emerge and prevail..
6. inbreda said...
Wasn't there a new law passed a year or two ago that meant that issuers of unsecured debt could recover that debt by confiscation or repossession - i.e. it made unsecured secured.
There are going to be so many repossessions...
...does anyone know how to invest in repo companies?
7. malct said...
Could it be possible to underestimate the extent of the planning that went into the issue of credit cards?
In particular the applied psychology on human behaviour. There is a sober documentary which deals with this in some depth, including how this meshes in with the rest of the debt based system. I'll post a link when I find it again.
With an almost bottomless pit of monopoly money banks have been able to hire the best shrinks and set them to work to maximise profits and security.
I may be worth remembering also that our society doesn't always reward each of us on true merit and worthyness. I agree with uncle tom, I think the problem is much more serious than is acknowledged. Most people are incredibly optimistic despite all.
People have been and are hiding poverty with debt - are we up against the buffers?
8. malct said...
The Secret History of the Credit Card was a 2004 “Frontline” presentation from the Public Broadcasting System. The program examines the nation’s use of credit and, more specifically, the methods used by credit card companies to obtain enormous profits. The Secret History of the Credit Card won the 2004-2005 Emmy Award for Outstanding Investigative Journalism.
PBS has made the entire program freely available online in RealMedia and Windows Media formats. The broadcast is divided into five segments of roughly twelve-minutes each for easier download.
http://www.pbs.org/wgbh/pages/frontline/shows/credit/
via
http://www.getrichslowly.org/blog/2006/11/28/the-secret-history-of-the-credit-card-repeat/
9. george monsoon said...
This is going to get ugly!
10. waiting patiently said...
In answer to Cyril's question (3), it is my understanding that you can't pay a debt with a debt, hence these people will be withdrawing the money from an ATM before paying the mortgage. This will generally also incur a further 1.5% fee.
Anyone doing this regularly is in serious financial trouble.
11. C'mon Correction said...
"sound fundamentals......." yeeeeaaahhhhh, riight !!