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January Data: One In Three Relied On Credit Card Just To Survive

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http://uk.finance.yahoo.com/news/One-three-rely-credit-cards-tele-1810266589.html?x=0

One in three rely on credit cards to make ends meet
13:15, Monday 31 January 2011
A third of credit card holders have relied on their plastic to cover day-to-day living costs during January, a survey has suggested.
Around 34pc of people with a credit card said they had had to use it to cover everyday expenses to see them through to their January payday.

The debt-ridden edifice known as UK Plc is collapsing from under our feet and it seems to be accelerating. One day we are going to wake up and say: OH.

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But 33pc of those who used their credit card admitted they relied on their plastic to cover the gap between their income and their spending every month.

But only 56pc of people pay off their bill in full each month, with 7pc estimating that it will take them more than three years to clear their debt.

A worrying statistic if accurate. What is puzzling is 33% are covering the gap between income and expenditure with credit and yet 44% don't pay off the bill at the end of the month? So what do the other 11% think they are doing then?

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Not really a shock just after christmas is it though?

It will be a story in april or may but is just wasting words now.

the 33% doing it regularly hasnt risen much has it?

Edited by richyc

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I think this may only be a demonstration of how little in the way of savings people tend to have.

In the lead-up to January's pay day, people are maybe six weeks away from their previous wage packet, and as many folks take their finances to the wire each month, it doesn't really surprise me that many have to bridge the gap with credit.

I can't recall which study and I don't have a link, but I remember some research from maybe a year or two back stating that a third of the population have 11 days' worth of savings (in terms of how long could they survive without income) or less[1]. If that's still the case, a six-week gap would run a third of the population out of money -- and with Christmas typically a more expensive time as well...

[1] Also, from memory, the same study said that the worst-off (in terms of savings) two-thirds had 56 days' (or fewer) worth of savings, so the majority of the population would be in serious trouble if they were without income for a couple of months.

Edited: for clarity.

Edited by Ologhai Jones

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i had to put a few things on the G/F's card, Petrol, some food etc, due to being paid on the 24th December and not getting paid till 28th January and a slight overspend during the Xmas (sales) period, but when i did get paid in January the amount was paid off, just means Feburary will be a little bight tighter than normal. no worries

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A third of credit card holders have relied on their plastic to cover day-to-day living costs during January, a survey has suggested.

Around 34pc of people with a credit card said they had had to use it to cover everyday expenses to see them through to their January payday.[/indent]

Thsi gets raised regularly, but if the CC is paid off every month (mine is) I can;t see the issue? it's simpler and safer than cash and I get 1% back from CapitalOne Mastercard.

If the debt is not paid off, though..

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i had to put a few things on the G/F's card, Petrol, some food etc, due to being paid on the 24th December and not getting paid till 28th January and a slight overspend during the Xmas (sales) period, but when i did get paid in January the amount was paid off, just means Feburary will be a little bight tighter than normal. no worries

If my personal finances were this tight, I'm pretty sure I wouldn't be able to sleep at night.

In a way, I admire people who can manage (I mean psychologically) in such situations.

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I think this may only be a demonstration of how little in the way of savings people tend to have.

In the lead-up to January's pay day, people are maybe six weeks away from their previous wage packet, and as many folks take their finances to the wire each month, it doesn't really surprise me that many have to bridge the gap with credit.

I can't recall which study and I don't have a link, but I remember some research from maybe a year or two back stating that a third of the population have 11 days' worth of savings (in terms of how long could they survive without income) or less[1]. If that's still the case, a six-week gap would run a third of the population out of money -- and with Christmas typically a more expensive time as well...

[1] Also, from memory, the same study said that the worst-off (in terms of savings) two-thirds had 56 days' (or fewer) worth of savings, so the majority of the population would be in serious trouble if they were without income for a couple of months.

Edited: for clarity.

Yes, I remember those stats coming out as well. A shockingly low level of personal savings leaving a sizeable amount of people unable to service debts/living costs after a very short period of unemployment.

If you have a sizeable proportion of the population reliant on credit (as opposed to just abusing it for rampant consumer spending) then you have serious, serious problems. It's clear that without easy credit access, our society would be in a very different state.

Yet more proof that TPTB will ulimately print to oblivion, IMO.

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Thsi gets raised regularly, but if the CC is paid off every month (mine is) I can;t see the issue? it's simpler and safer than cash and I get 1% back from CapitalOne Mastercard.

If the debt is not paid off, though..

How do they define 'rely'?

My definition would be that they need the credit, not that they use the card.

I use my cards as much as possible (Tesco points, air miles, interest free grace period, consumer protection, convenience) but I pay them off in full every month. Hence I use them heavily but don't rely on them.

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I think this may only be a demonstration of how little in the way of savings people tend to have.

In the lead-up to January's pay day, people are maybe six weeks away from their previous wage packet, and as many folks take their finances to the wire each month, it doesn't really surprise me that many have to bridge the gap with credit.

I can't recall which study and I don't have a link, but I remember some research from maybe a year or two back stating that a third of the population have 11 days' worth of savings (in terms of how long could they survive without income) or less[1]. If that's still the case, a six-week gap would run a third of the population out of money -- and with Christmas typically a more expensive time as well...

[1] Also, from memory, the same study said that the worst-off (in terms of savings) two-thirds had 56 days' (or fewer) worth of savings, so the majority of the population would be in serious trouble if they were without income for a couple of months.

Edited: for clarity.

I have 5,404 days of savings at my current rate of expenditure, nearly 12 and half years :)

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If my personal finances were this tight, I'm pretty sure I wouldn't be able to sleep at night.

In a way, I admire people who can manage (I mean psychologically) in such situations.

Just because some folk used a credit card to buy food or fuel in the run up to January payday doesn't mean they don't have savings.

They might have preferred to use their card and pay it off once they get paid, rather than dip into their savings. Dipping into your savings just because your are a bit short is a bad habit if you ask me.

Towards the end of January I bought a couple of things on my CC, and I will pay them off at the end of Feb. Sure I could have taken a relatively small sum out my ISA to cover those costs (or more accurately, forgone the amount I paid into my ISA from my end-of-Januar pay), but I don't see why I should do that when I won't be charged any interest on my CC.

Edited by Jie Bie

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Did you factor inflation into your calculations?

If the money isn't just kept under the mattress (and assuming savings accounts, stocks, gold or whatever) roughly preserves the real value of the money, does inflation need to be taken into account?

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Just because some folk used a credit card to buy food or fuel in the run up to January payday doesn't mean they don't have savings.

They might have preferred to use their card and pay it off once they get paid, rather than dip into their savings. Dipping into your savings just because your are a bit short is a bad habit if you ask me.

Towards the end of January I bought a couple of things on my CC, and I will pay them off at the end of Feb. Sure I could have taken a relatively small sum out my ISA to cover those costs (or more accurately, forgone the amount I paid into my ISA from my end-of-Januar pay), but I don't see why I should do that when I won't be charged any interest on my CC.

Fair comment.

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A few years back (actually a good few years back) lower paid workers were always in that position. Living from pay day to pay day - it was standard practice and the normal thing to do so it looks like not much has changed really. There were some stats recently suggesting that these days on average huge numbers of people don't have more than a few days spare cash/savings to last longer than a few days.

The difference then being if they got caught short they would go to their employer for a "sub" until the next pay day.

The banks ever looking for an opportunity to exploit and control rather than make an honest profit must have been rubbing their hands.

Edited by billybong

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A few years back (actually a good few years back) lower paid workers were always in that position. Living from pay day to pay day - it was standard practice and the normal thing to do so it looks like not much has changed really.

The difference being if they got caught short they would go to their employer for a "sub" until the next pay day.

The banks ever looking for an opportunity to exploit and control rather than make an honest profit must have been rubbing their hands.

It's sometimes hard to separate out the Good Old Days from the old days, but I have the sense that a household breadwinner would have left school at 16 (or younger) and worked for the same company till they were 65 with almost no question of ever having to (or wanting to) look for other work.

When (and assuming this olden-days myth is actually more or less true) you KNOW you have a job for life and a state pension thereafter, who needs to do anything other than live week-by-week?

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Single person or family expenditure?

Assuming 0% interest on it and 0% inflation?

Not taking into account inflation. Single person, although the girlfriend has a roughly similar amount. No mortgage and very few outgoings.

Currently my savings are earning 2.85% ISA and 2.9% savings account so limiting real losses. Although the money is purely for house purchase so in reality the money is appreciating compared to HPI. :)

You geek!

How else do you think I reached 3000 posts so quick!

Edited by Pent Up

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Not taking into account inflation. Single person, although the girlfriend has a roughly similar amount. No mortgage and very few outgoings.

(...)

Are you saving more than 50% of your take home pay?

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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