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enworb

Credit Card Companies

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I don't know about you but i've been bitten by the credit card bug. Unless I am mistaken, I couldn't use my debit card to pay over the phone ,back in the day.... or maybe I just didn't have enough money in the bank.

I applied for a card because I had a rare car and needed to buy spares from across the country. No proble at first except more and more companies were offering silly amounts of money.

Like an idiot (beat you to it :D ) I had another as back up. I only had £500 limit on the first and about £200 on the next.

I was offered more cards because I always paid the minimum amount back each month but I tore up the application form.

Since those days it seems lenders are offering £2000 maximum to someone earning half that. If that person ever spent the maximum amount it would be impossible to pay back.

Has anyone had these sorts of offers and do you think these lenders should be held partly responsible for lending an unpayable amount???

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I don't know about you but i've been bitten by the credit card bug. Unless I am mistaken, I couldn't use my debit card to pay over the phone ,back in the day.... or maybe I just didn't have enough money in the bank.

I applied for a card because I had a rare car and needed to buy spares from across the country. No proble at first except more and more companies were offering silly amounts of money.

Like an idiot (beat you to it :D ) I had another as back up. I only had £500 limit on the first and about £200 on the next.

I was offered more cards because I always paid the minimum amount back each month but I tore up the application form.

Since those days it seems lenders are offering £2000 maximum to someone earning half that. If that person ever spent the maximum amount it would be impossible to pay back.

Has anyone had these sorts of offers and do you think these lenders should be held partly responsible for lending an unpayable amount???

In my opinion, the ultimate person responsible for a debt problem is the person in debt.

That having been said, it has to be recognised that there are people who either knowingly or through weak-mindedness or stupidity get themselves into unpayable debt. In this respect, the banks are responsible too. They really should have "known better" themselves too.

So, I think both the lender and debtor are to blame.

Therefore, there has to be some sort of regulation (in the widest sense of the word) of lending but there also has to be personal responsibilty.

If banks hadn't totally abandoned the 'unwritten' commonly understood mortgage multiple maximum of 3.5x salary then today's HP crisis would be nothing like as large.

While there are always exceptions (many people genuinely could afford more than 3.5x salary multiple, due to frugal living or whatever), the 3.5x multiple was a sensible, if perhaps not terribly scientific, 'rule of thumb' which worked well until it was all but abandoned.

Your specific question was about credit cards, but the same principle applies here. There must be some sort of income multiple of which it is not sensible to have a CC balance any greater than.

Since CC debt is 'supposed' to be short term, and the rates much higher, then perhaps something more like 0.2x salary or less would be a sensible MAXIMUM, but we hear all the time of people having tens of thousands in CC balances, which is clearly approaching 1x or more of average incomes.

Debt is slavery. The sooner people wise up to that, the better.

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Has anyone had these sorts of offers and do you think these lenders should be held partly responsible for lending an unpayable amount???

Maybe, it panders to peoples' innate desire for instant gratification, bit like experiments they do with kids by leaving them in the room full of sweets and telling them they can have twice as much if they don't eat anything until the adult comes back, it's a shame, they're good at first but eventually they buckle and start eating all the sweets :lol:

So humans seek instant rather than deferred gratification despite the carrot of greater rewards, obviously some people are better at controlling this than others but the public are like Pavlov's dog to the card issuers. Like everyone on here, I could go out now and splurge £10K on plastic, problem is I know that's £10K of my money I will have to pay it back and only paying the minimum balance, however managable it may seem, I know deep down it's a akin to jumping into a hole and keep digging.

So no, I don't blame the banks regardless of how insidious or persuasive their advertising may seem, people are adults and we should be responsible for our own actions, nobody forces you to take out a loan, apply for a credit card and nobody forces you to then use their facilities up to the limit, and it's not their job to discourage you either in a big brother fashion.

Obviously they issue credit to people who are easily lead or financially illiterate, but whenever I see these sob stories on TV about how people are facing a £100k mountain (most of which is no doubt interest and charges) I can't help getting a nagging feeling knowing full well that nobody actually forced the people through the door of the bank and made them take all this money. They were wise enough to blow it on something, even though they never have anything to show for it, so they should have questioned where it was all coming from. If we go down this route where everyone is a victim it will cost the level headed customers billions for others profligacy and irresponsibility and the banking system would resemble a priviate benefits system where the best sob story wins.

Of course the banks aren't lending their own money or taking on any direct liabilities in many cases, if they had to do this then they would be a little more careful, but this is a matter for the regulators since no bank is going to voluntarily place itself at a disadvantage when it comes to competition.

The way they securitise debt and the way the FSA force pension funds to dump equities and buy 'secure bonds' has really screwed up the natural systems in the markets to price in risk, companies have chased the yield instead of a flight to quality. This in tern can be blamed on higher (impossible) demands being placed on the provision of pensions and the low interest rates making the sort of returns required impossible. Faced with ever higher liabilities and lower rates no wonder they chase these junk bonds and drive yields down, thus obfuscating their real risk, it also makes government borrowing cheaper, today very low quality debt is only yielding the equivalent of gilts from a few years ago. So it goes much deeper.

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Both sides are to blame, creditor and debtor - however - when you end up with a) predatory lending, or B) vast segments of the population eternally in debt, that has significant repercussions for society as a whole. Don't tell me the CC companies don't have actuaries telling them exactly what the risks and rewards of these approaches are.

Money that could be being used 'productively' is instead spent servicing debt. Limits growth in other areas, crippling other sectors of the economy.

While we can say 'they took on the debt' a lot of the credit card companies specifically go out with predatory practices looking for people who don't understand what they are doing - it's an 18 year old single mother against a multi-billion pound marketing machine. Not exactly fair - more of the blame is on the CC companies.

Simple solutions:

1) Put a cap on the max rate they can charge, say 20% (still high), this will limit the willingness of the CC companies to lend to 'riskier' customers

2) Raise minimum payments so that there is a 'max time' any debt will be paid off over, say 5 years - doesn't stop anyone from adding to the card, but enforces higher payments from day 1 and doesn't let the debt 'creep up'.

3) Limits on credit limits compared to individuals income. Difficult one to enforce really.

Problem is - proper regulations and enforcement of them (mortgages too), will be devastating to an economy hooked on easy credit, and no politician is going to push it through until the bust has long since happened.

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I'm a full time student. I have two cards one at Aus$1,300 the other $1,500 limits. I recently (two weeks ago) lost my wallet so I cancelled both cards. Today I received two letters from the bank asking if I wanted to increase my limit to $4k. Now I have trouble paying off these little nasties as it is. Also I noticed that they had my old cancelled cards numbers.

So I shredded to offers and used to the prepaid envelopes to send some junk mail back to the bank. B)

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I'm a full time student. I have two cards one at Aus$1,300 the other $1,500 limits. I recently (two weeks ago) lost my wallet so I cancelled both cards. Today I received two letters from the bank asking if I wanted to increase my limit to $4k. Now I have trouble paying off these little nasties as it is. Also I noticed that they had my old cancelled cards numbers.

So I shredded to offers and used to the prepaid envelopes to send some junk mail back to the bank. B)

This is my point. It is illegal to lie when taking out out a self certified mortgage because the 3 1/5 rule is there to protect the lender and the borrower. But credit card companies can offer credit at 10 times without any justification.

Of course there is some blame on the borrowers themselves there is a need for regulation over the amounts being offered.

This topic may not seem relevant to some, but the first year after moving away from home - renting or buying - is difficult enough without credit card bills.

I don'y have any credit cards now. If I want something that badly I work overtime and ride my mountain bike to and from work for a month. A small price to pay compared to the stresses of even more bills through the door.

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I don't know about you but i've been bitten by the credit card bug. Unless I am mistaken, I couldn't use my debit card to pay over the phone ,back in the day.... or maybe I just didn't have enough money in the bank.

I applied for a card because I had a rare car and needed to buy spares from across the country. No proble at first except more and more companies were offering silly amounts of money.

Like an idiot (beat you to it :D ) I had another as back up. I only had £500 limit on the first and about £200 on the next.

I was offered more cards because I always paid the minimum amount back each month but I tore up the application form.

Since those days it seems lenders are offering £2000 maximum to someone earning half that. If that person ever spent the maximum amount it would be impossible to pay back.

Has anyone had these sorts of offers and do you think these lenders should be held partly responsible for lending an unpayable amount???

No disrespect but its down to the individual and a lot of individuals are not terribly savvy when it comes to personal finance and debt.

I had a £600 limit and have kept this in place on my credit card any other card "touts" and letters I get through the door go one way for recycling into the bin for soemthing more useful.

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No disrespect but its down to the individual and a lot of individuals are not terribly savvy when it comes to personal finance and debt.

I had a £600 limit and have kept this in place on my credit card any other card "touts" and letters I get through the door go one way for recycling into the bin for soemthing more useful.

No offence taken. I don't know whether you read my ladt post, but I think there is a massive connection between C/C's and the challenges of leaving the family home.

Why is there a 3 1/5 x salary limit on mortages and what seems an unlimited multiple for credit cards. And lets not forget, credit card IR are as much as 30% compared to 6% or so for a mortgage.

I agree that to some extent it is the responsibility. But think of the people that have used their cards to keep their kids happy, only to find that council tax has risen, petrol prices have gone through the roof and whatever else the government has decided to charge us more for.

All of a suddenly, C/C's are not as important as paying these increased bills because not paying c/c's won't land you in prison. The others could. A few months down the line and the interest alone on the crdit cards will make it almost impossible to keep up repayments.

Do lenders of credit check each individual's outgoings, such as mortgage, other C/C's and hp. I they do then it really is a concern. Might they offer the someone knowing they are likely to miss payments, thus make more money. If they don't consider outgoings, surly they need to. My mortgage lender did and my repayments are negligable compared to some peoples C/C bills.

Sorry about the spelling mistakes. I normally write good England :lol:

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  • 301 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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