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lypsey

Barclaycard

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http://www.telegraph.co.uk/comment/telegra...he-thought.html

It says "There was a quiet shift in the news this week: we were confronted with not one but several indicators of economic recovery. It felt strange, but good, to hear predictions that pointed away from apocalyptic crisis.

To recap. The banks reported unexpectedly solid half-yearly profits: Barclays Capital's doubled to more than £1 billion. Even Stephen Hester, the chief executive of the Royal Bank of Scotland, said he was confident that RBS shares, currently valued at 49p, were on their way to 70p, at which point he will collect bonuses of £6.5 million.

Neil Woodford: 'UK economic green shoots look illusory'Moreover, car sales have lurched forward in a kangaroo hop worthy of a learner driver: a 24.8 per cent fall in June has turned into growth of 2.4 per cent in July. The value of commercial property has risen for the first time in two years, and most people believe

that house prices will rise next year. The FTSE-100 has risen by 1,200 points (33 per cent) since its low in March.

Some business commentators, having spotted green shoots ages ago, are now talking about an "economic springtime", with full-blown recovery next year. They are dismayed by the Bank of England's continuing pessimism, illustrated by its decision this week to continue "quantitative easing" (otherwise known as printing money). Now that the manufacturing sector is picking up, they argue, the worst is truly over.

Yet there is another point of view, which does not contradict the evidence of rising profits but draws very different conclusions from them. Jeff Randall, writing in these pages yesterday, was scathing about the "public relations sophistry" of the banks. "While investment bankers were enjoying a knees-up at the doubling of Barclays Capital's profits… the party hats were kept tucked away in the bit of the bank that deals with ordinary folk," he wrote. A fall of more than 60 per cent in the profits of Barclays' retail division and a 92 per cent increase in the cost of Barclaycard defaults are not very spring-like.

Encouraging headline figures can be misleading; or, rather, they tell only part of the story. There can be terrible pain in society even when share prices are rising, as the experience of the 1980s demonstrated. The number of companies going bust has fallen over the last quarter, but is still 23 per cent higher than a year ago. Personal insolvency, meanwhile, has hit a new record in England and Wales: there were 33,073 cases in the second quarter of 2009, the vast majority of which point to a career ruined by recession.

These victims will derive little comfort from the "signs of recovery" – and neither should the rest of us, according to some analysts. The Bank of England's decision to increase its quantitative easing can be blamed on unnecessary pessimism; but another explanation – doing the rounds in the City yesterday – is that the Bank's Monetary Policy Committee knows something that the rest of us do not about the long-term prospects for the economy. There can be a long delay between the first bite of a credit crunch and the emergence of long-term, even permanent casualties. Eric Daniels, the boss of Lloyds TSB, believes that unemployment will peak in the middle of next year at roughly the same level as in the recession of the early 1990s. If so, more than three million people will be out of work, or more than 10 per cent of the workforce.

None of this means that we must discount this week's positive statistics; it does mean that we do not yet know how to interpret them. We are not facing two stark possibilities, "recovery" and "recession", but a messy combination. The business landscape of 2010 will not resemble the economy of the past few years, any more than politics can revert to the days before the expenses scandal. The era of cheap credit is over, too late. Governments have run up incredible debts to save banks (without a clear idea of how to pay them off); yet those banks are reluctant to help ordinary borrowers. In short, anyone expecting business as usual will be disappointed. "

I was fascinated by the highlighted line about Barclaycard "92 per cent increase in the cost of Barclaycard defaults "

This has hardly had a mention anywhere and they are our biggest credit card provider

PS I hope this hasn't been posted before , couldn't see it anywhere

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Any talk of the recession being over and done with is like saying the first world war will be over by Christmas. The recession will continue to impact small businesses (who can't get credit for love nor money) and individuals for probably the next 5 years.

There cannot be any credible belief that house price falls have finished against such a background - the fact that we have just been through the biggest bubble in housing history (and that credit ain't coming back) really does re-inforce the belief that there's more to come. The final shape that process takes - e.g. a long, drawn-out period of flat prices versus another sharp leg-down is anyone's guess.

Either way it ain't over. The impact on consumers is just beginning.

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What would be interesting but I don't know how to find out is what the cost of the 92% rise is??

The story refers to a 92% increase in the cost of defaults - this could be debt-recovery costs e.g. court actions or writing-off / selling-off debts to third parties. You might find something in the trading statements on Barclaycard's website.

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[The way the article is worded I am not sure I agree with you

They say that defaults are costing the company 92% more, not that the cost of recovering is 92% more

Sorry maybe I am reading incorrectly

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My missus is a cheese for one of the high street banks in the retail division - she reakons the credit card division has had its brown trousers on stand by for several months - now they're wearing them.

Banks are expecting house prices to come down a lot (no matter what they may be saying publicly). Hence the low LTV lending at the moment.

Only things that are going to go up in the next 18 months are unemployment and bad debts.

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[The way the article is worded I am not sure I agree with you

They say that defaults are costing the company 92% more, not that the cost of recovering is 92% more

Sorry maybe I am reading incorrectly

The article refers to a 92% increase in default costs - debt recovery is probably part of that overall cost.

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Best way to look at it was if they were losing say 3-4% on defaults before, that's now more like 6-8%. No wonder credit card rates are going up and a lot of more mediocre risks can't get credit.

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What would be interesting but I don't know how to find out is what the cost of the 92% rise is??

Why does it matter. The amout that I pay my credit card company each year is zero pence, they can percentage increase that as much as they like :rolleyes:

tim

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Why does it matter. The amout that I pay my credit card company each year is zero pence, they can percentage increase that as much as they like :rolleyes:

tim

Back in the late 1990's non-fee cards were getting rare. They may start re-introducing fees to cover the costs of their bad debts - then you'll pay!

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Back in the late 1990's non-fee cards were getting rare. They may start re-introducing fees to cover the costs of their bad debts - then you'll pay!

I agree, I think the credit card companies will be discussing that item on their agendas about....now!

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Back in the late 1990's non-fee cards were getting rare. They may start re-introducing fees to cover the costs of their bad debts - then you'll pay!

Why would he pay? Just ditch the card. If my card provider dropped the 1% cashback, dropped the discounts and started charging for use I wouldn't bother having it.

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Why would he pay? Just ditch the card. If my card provider dropped the 1% cashback, dropped the discounts and started charging for use I wouldn't bother having it.

It's perfectly possible to live life without a credit card, but it's a lot less convenient. If all companies charge (and a very large majority have in the past) this may be your best bet. The banks are looking to repair their books - we have a post noting a 92% increase in charges for Barclaycard - I can see charging back on the agenda very shortly - it will go hand in hand with bank charges.

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My missus is a cheese for one of the high street banks in the retail division - she reakons the credit card division has had its brown trousers on stand by for several months - now they're wearing them.

Banks are expecting house prices to come down a lot (no matter what they may be saying publicly). Hence the low LTV lending at the moment.

Only things that are going to go up in the next 18 months are unemployment and bad debts.

Its getting like the politburo, what ever the banks say take the opposite view.

Banking crisis's take years to resolve.

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My missus is a cheese for one of the high street banks in the retail division - she reakons the credit card division has had its brown trousers on stand by for several months - now they're wearing them.

....

Interesting. I forgot to pay the minimum off my monthly balance recently and as well as the £25 penalty the CC co (big high St bank) cut my credit limit by circa 90%!!! (I promptly paid off the balance in full I've set up a dd for the min amount each month from now on).

I've only had the card for a few months, so I assume I started to imitate the behaviour of a potential defaulter, and they went nuclear more or less straight away. They are indeed in brown trouser mode.

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Interesting. I forgot to pay the minimum off my monthly balance recently and as well as the £25 penalty the CC co (big high St bank) cut my credit limit by circa 90%!!! (I promptly paid off the balance in full I've set up a dd for the min amount each month from now on).

I've only had the card for a few months, so I assume I started to imitate the behaviour of a potential defaulter, and they went nuclear more or less straight away. They are indeed in brown trouser mode.

Credit cards are a bellwhether - the numbers of people who keep the wolf from the door by paying-off the mortgage with money borrowed on the credit-card is phenomenal. It's only delaying the inevitable.

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Credit cards are a bellwhether - the numbers of people who keep the wolf from the door by paying-off the mortgage with money borrowed on the credit-card is phenomenal. It's only delaying the inevitable.

I stopped using mine after a fraud issue. Was likely an inside job because my other personal details were taken at the same time.

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