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Credit Card Rejection Hits Three Million As Total Credit Card Debt Hits £38.7Billion

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I 27/9/13

'More than three million people have had their application for a credit card rejected in the past 12 months. .

Research from comparison website Totally Money suggests that one in 10 applications is turned down as lenders continue to play tough with borrowers who have even the faintest stain on their credit record.

But even applying for a card and being turned down can leave you with a black mark, lessening the chance of being accepted next time you apply.

But the research revealed that a fifth of those who were turned down for a card tried immediately to get an alternative from another firm. In the process causing much more damage to their credit score.

Even those with years of using plastic cards are getting rejected for many of the headline best-buy deals, plastic card companies now offer to tempt customers. Barclaycard, for instance, is currently offering 0 per cent for as long as 28 months — until the end of 2015.

"These are frustrating times for credit card customers as they are bombarded with some of the best balance transfer deals in history but they simply cannot get them," pointed out Will Becker of Totally Money.

"Consumers must be made aware that many of these deals are only available to those with a squeaky clean credit record."

In other words the credit card firms are using low-cost rates and long-term interest-free deals to cherry-pick the best customers from their rivals, leaving the rest of us on poorer-paying deals and, after being rejected, with a lower credit score.

It's not just the sting of rejection and the challenge of getting future credit that hurts, but the fact that many cardholders are effectively being forced to pay much more interest than necessary.

Totally Money reckons rejected consumers are left languishing on deals which could be costing £108m a month in interest payments.

However, there are a couple of things people can do to reduce the chance of future rejection. The first is to ensure you're included on the electoral register. That's a crucial piece of information used by lenders when deciding to borrow.

Next is to ensure you don't miss any monthly payments on your existing plastic, mortgage or other bills. The risk that you may not repay the debt will get you the blackest mark possible on your crdit score.

Meanwhile new figures published this week revealed that those that are being accepted for credit seem to be unable to control it and are running up debt in record levels. Consumers borrowed a record-breaking £8.4bn on their credit cards in August, according to official figures from the British Bankers' Association.

The figures raise fresh fears that millions are surviving day-to-day on credit, with a recent Which? report suggesting more than five million people are borrowing to pay for essentials, such as food.

The new figures revealed that more than four million plastic card transactions a day are currently being processed in the UK. Frighteningly, the figures show the total that we collectively owe on credit cards has reached an all-time high of £38.7bn.'

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I 27/9/13

'More than three million people have had their application for a credit card rejected in the past 12 months. .

Meanwhile new figures published this week revealed that those that are being accepted for credit seem to be unable to control it and are running up debt in record levels. Consumers borrowed a record-breaking £8.4bn on their credit cards in August, according to official figures from the British Bankers' Association.

The figures raise fresh fears that millions are surviving day-to-day on credit, with a recent Which? report suggesting more than five million people are borrowing to pay for essentials, such as food.

The new figures revealed that more than four million plastic card transactions a day are currently being processed in the UK. Frighteningly, the figures show the total that we collectively owe on credit cards has reached an all-time high of £38.7bn.'

The figures are scary...

So now the cards are maxed out to the tune of 38.7bn or not available to some. The next step down is to use payday loans for essentials such as food and utilities.

http://www.credittod...over-food-costs

More than half, or 51%, of CAP's 1,577 clients had taken out between two and five payday loans before they called the charity for advice, while 16% admitted they had "lost count" of the number of payday loans they had used.

Some 36% of those asked by the CAP used this type of loan to pay their rent or mortgage.

Barlow said: "People who take out this expensive sort of credit are hungry, worried about keeping warm and becoming homeless.

Worrying times for many and no signs of any improvement for the foreseeable

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How did we get by without credit cards in the past I ask myself......surely if we can't afford to now live within our means, how on earth are we expected to live with the extra cost of having to pay credit card or pay day loan interest.....for those with little, expensive credit will only see that they end up with less...(unless they have no intention in paying for any of it). ;)

Edited by winkie

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They are only giving credit cards to homeowners with equity.

I can vouch that that isnt the case.

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Winkie you have music for everything :)

How did we get by without credit cards in the past I ask myself......surely if we can't afford to now live within our means, how on earth are we expected to live with the extra cost of having to pay credit card or pay day loan interest.....for those with little, expensive credit will only see that they end up with less...(unless they have no intention in paying for any of it)

Would imagine most do currently pay their loans regardless of the high rates of interest but there will come a day when they can no longer pay - then what happens? Will we bail out the credit card providers and payday loan companies too?

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Winkie you have music for everything :)

Would imagine most do currently pay their loans regardless of the high rates of interest but there will come a day when they can no longer pay - then what happens? Will we bail out the credit card providers and payday loan companies too?

No, they make enough profit as it is, they need no bail outs......they make allowances for losses in the high rates they charge, their borrowers are paying for their defaulters....they can snatch back short-term credit back as easily as they can give it......I would think it better for someone to save ten ponds a month or whatever they pay in interest to a lender, build it up and then borrow it back from themselves to repay themselves.....but of course that takes commitment and determination...how much easier it is to spend spare than to save it....lenders love spenders. ;)

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Winkie you have music for everything :)

Would imagine most do currently pay their loans regardless of the high rates of interest but there will come a day when they can no longer pay - then what happens? Will we bail out the credit card providers and payday loan companies too?

RBS & Lloyds are fully supported by govt. The other cc providers get sufficient help through the rolling ZIRP/QE subsidy/bailout to offset impairments and defaults. Not so sure about the distress lenders, but most of them seem to be tied to big City institutions in some fashion or other.

I particularly enjoyed this bit though:

It's not just the sting of rejection and the challenge of getting future credit that hurts, but the fact that many cardholders are effectively being forced to pay much more interest than necessary.

Totally Money reckons rejected consumers are left languishing on deals which could be costing £108m a month in interest payments.

:lol:

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No, they make enough profit as it is, they need no bail outs......they make allowances for losses in the high rates they charge, their borrowers are paying for their defaulters....they can snatch back short-term credit back as easily as they can give it......I would think it better for someone to save ten ponds a month or whatever they pay in interest to a lender, build it up and then borrow it back from themselves to repay themselves.....but of course that takes commitment and determination...how much easier it is to spend spare than to save it....lenders love spenders. ;)

You are correct, of course, but you are assuming people have discipline and common sense :)

Bring back primary school savings - start teaching children at a young age about saving, interest and the challenge of accomplishing a purchase or target.

Wee song for you, for a change.

Edited by neontetra

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They are only giving credit cards to homeowners with equity.

And they only give remortgages to people with zero balances on their credit cards so a bit of a catch-22. At least that's what happened when I enquired last month. Fairly annoying as I had only just taken advantage of a long 0% stooze. (Had no credit card debt before so paid for a weeks eurodisney for my wife and daughter while we had the bathroom refitted).

Edit: one of the clauses in the contract was to clear all balances before taking out the offer.

Edited by longtomsilver

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That's just applications.

Nothing more f-king annoying than being stuck at the supermarket behind someone who's entire wallet full of cards are being rejected.

Politeness stops me from tapping them on the shoulder and pointing to Iceland.

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That's just applications.

Nothing more f-king annoying than being stuck at the supermarket behind someone who's entire wallet full of cards are being rejected.

Politeness stops me from tapping them on the shoulder and pointing to Iceland.

In all my years I have never ever seen this happen to someone in front of me at the checkout.

Maybe I should point you away from Asda to Sainsbury :D

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Shocking state of affairs. People who can't afford to pay 4% interest on their mortgage were relying on being able to pay 20% interest on credit card advances to pay the mortgage, now they are going to have to go to Wonga and pay 1500% interest on their mortgage.

Where can it all end?

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In all my years I have never ever seen this happen to someone in front of me at the checkout.

Maybe I should point you away from Asda to Sainsbury :D

Tesco + coop.

you're lucky. Im up to about 5 times this year.

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Home ownership does strengthen your credit score

I have a "perfect" 999 rating despite not being one. I'm also self employed and I havn't had a loan of any description for 10 years or so including any credit cards, although I have had charge cards (which probably helps). So I can say that you dont need 1) a house 2) a regular job or 3) a recent history of loan repayments in order to get a top rating.

Edited by goldbug9999

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I have a "perfect" 999 rating despite not being one. I'm also self employed and I havn't had a loan of any description for 10 years or so including any credit cards, although I have had charge cards (which probably helps). So I can say that you dont need 1) a house 2) a regular job or 3) a recent history of loan repayments in order to get a top rating.

If you already have a charge card and a bank account why would a rating matter if you didn't want or need to borrow money? ;)

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I have no idea how these rating systems work. I'm always getting offers of credit cards. (two or three a month)

I do have a credit card but have no need for one as I am not a fan of credit. I pay for whatever I can on my Amazon credit card solely because I get 1% cash back as vouchers which I then spend on ebooks. It's paid off in full every month automatically and so I'm never charged interest. I also don't have a house or any other debts or loans or anything. Surely I should be a rubbish person for them as I never earn them any money beyond the percentage they get from retailers when I make a purchase. I thought they'd be targeting the people who are always slipping into the red. weird

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I have no idea how these rating systems work. I'm always getting offers of credit cards. (two or three a month)

I do have a credit card but have no need for one as I am not a fan of credit. I pay for whatever I can on my Amazon credit card solely because I get 1% cash back as vouchers which I then spend on ebooks. It's paid off in full every month automatically and so I'm never charged interest. I also don't have a house or any other debts or loans or anything. Surely I should be a rubbish person for them as I never earn them any money beyond the percentage they get from retailers when I make a purchase. I thought they'd be targeting the people who are always slipping into the red. weird

They're looking for suckers sure enough, but the marginal cost of leafleting the entire population is so low that I'm sure everyone with a private postal address gets hit periodically, on the off chance.

"I used to be snow white but I drifted."

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I do have a credit card but have no need for one as I am not a fan of credit.

If you ever rent a car or stay in a hotel, you need one. All car rental agencies and most hotels require a credit card, and the minority of hotels that will accept a debit card at check-in will pre-authorise quite a large sum (typically £500) which will only be released back to you a month or so after you've left.

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Ive never had an issue using my debit card with the major xhaim hotels, and even the no so major ones? No pre authorised sum at all

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