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Personal Insolvencies Rise 22%

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A total of 22,503 people were left with unmanageable debts in the second quarter of the year

So a projected total of ~90,000 per year. A rise of ~19,800 per year and almost certainly climbing. Good news :unsure:

Edited by doahh

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Reminds me, I didn't see this posted anywhere - apologies if it's already been done:

A total of 1.4 million people in the UK have only made the minimum repayments on their credit cards for three years in a row, the City regulator has said.

The profits made from these customers mean credit card firms do little to address persistent debt, the Financial Conduct Authority (FCA) said.

Nearly half of them have borrowed more than 90% of their credit limit consistently for three years.

http://www.bbc.co.uk/news/business-36892843

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Nearly half of them have borrowed more than 90% of their credit limit consistently for three years.

Isn't the average credit card limit £8k now? So 50% of people with credit cards have been -£7,200 into their -£8,000 limit.

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Isn't the average credit card limit £8k now? So 50% of people with credit cards have been -£7,200 into their -£8,000 limit.

That's exactly my limit, don't know if it's the average but it sounds about right. So average monthly payments of what, £200? Add that to the £300 for the car lease, £800 for the mortgage and say £100 on student loans or store cards. That leaves someone on a £25k salary with about £250 a month for bills, food, petrol, clothes etc.

Not surprising so many are choosing the bankruptcy route.

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I only know two bankrupts in real life.

They coincidentally happen to share a particular profession whose entry requirements appear to be a compulsion to broadcast mistruths easier than respiration.

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I only know two bankrupts in real life.

They coincidentally happen to share a particular profession whose entry requirements appear to be a compulsion to broadcast mistruths easier than respiration.

You know not one but two BBC journalists?

(I had to)

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So a projected total of ~90,000 per year. A rise of ~19,800 per year and almost certainly climbing. Good news :unsure:

I am pleased that finally the decade long "debt is good, borrow to the hilt" message is proving to have been a lie. The low IRs were hailed as making debt safe .... another lie. Once people stop being able to make mortgage repayments, or become unable to remortgage, we'll start seeing some big house price drops. bring it on.

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That's exactly my limit, don't know if it's the average but it sounds about right. So average monthly payments of what, £200? Add that to the £300 for the car lease, £800 for the mortgage and say £100 on student loans or store cards. That leaves someone on a £25k salary with about £250 a month for bills, food, petrol, clothes etc.

Not surprising so many are choosing the bankruptcy route.

That is if you have a regular monthly salary......thousands don't, and if they don't get paid, get paid by those that owe them money or paid enough, they can't pay their own regular monthly debt, rental or lease repayments....... ;)

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That is if you have a regular monthly salary......thousands don't, and if they don't get paid, get paid by those that owe them money or paid enough, they can't pay their own regular monthly debt, rental or lease repayments....... ;)

Yep. What a wonderful recovery we have.

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Reminds me, I didn't see this posted anywhere - apologies if it's already been done:

(1.4 million people make minimum payments only)

There is a nuance that is perhaps worth mentioning....a few years ago I (deliberately) racked up a not inconsequential amount on the credit card over a month. I then did a balance transfer (fee free) to a 30 month interest free card, and made the minimum payment for another 2.5 years. I then moved the balance to another card once that had finished - again for free to a 2 year one, and paid it off interest free for then next 2 years.

All the while the money to pay it off in full was earning a token amount of interest or invested elsewhere.

I believe there's now a card that allows you to directly take your entire credit limit as 'money' (i.e. transfer to a current account), and then do the same thing again.

I've stopped playing this game now because I'd rather not mess about anymore ... but there might be a fair few playing this game (perhaps whilst not having the principal to pay it off eventually - just surf it till the music stops).

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There is a nuance that is perhaps worth mentioning....a few years ago I (deliberately) racked up a not inconsequential amount on the credit card over a month. I then did a balance transfer (fee free) to a 30 month interest free card, and made the minimum payment for another 2.5 years. I then moved the balance to another card once that had finished - again for free to a 2 year one, and paid it off interest free for then next 2 years.

All the while the money to pay it off in full was earning a token amount of interest or invested elsewhere.

I believe there's now a card that allows you to directly take your entire credit limit as 'money' (i.e. transfer to a current account), and then do the same thing again.

I've stopped playing this game now because I'd rather not mess about anymore ... but there might be a fair few playing this game (perhaps whilst not having the principal to pay it off eventually - just surf it till the music stops).

Didn't quite a few people playing that game come unstuck when all the lenders pulled their 0% on balance transfers deals back in the 2008 crisis

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There is a nuance that is perhaps worth mentioning....a few years ago I (deliberately) racked up a not inconsequential amount on the credit card over a month. I then did a balance transfer (fee free) to a 30 month interest free card, and made the minimum payment for another 2.5 years. I then moved the balance to another card once that had finished - again for free to a 2 year one, and paid it off interest free for then next 2 years.

All the while the money to pay it off in full was earning a token amount of interest or invested elsewhere.

I believe there's now a card that allows you to directly take your entire credit limit as 'money' (i.e. transfer to a current account), and then do the same thing again.

I've stopped playing this game now because I'd rather not mess about anymore ... but there might be a fair few playing this game (perhaps whilst not having the principal to pay it off eventually - just surf it till the music stops).

Good point. I imagine there are also quite a few others making minimum repayments for a while before contacting the lender and asking for a write off on the basis that they can't pay. But in all honesty, I suspect the vast majority are genuinely unable to pay more than the minimum each month.

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Didn't quite a few people playing that game come unstuck when all the lenders pulled their 0% on balance transfers deals back in the 2008 crisis

The 0% interest on balance transfers offers are certainly back in force now, though.

I keep being pestered by one of my cards to transfer a balance for up to 18 months, interest free. There's a 3.5% fee for the transfer itself but when you consider that you are effectively getting an 18 month interest free, unsecured loan it is amazingly cheap.

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Didn't quite a few people playing that game come unstuck when all the lenders pulled their 0% on balance transfers deals back in the 2008 crisis

The 0% interest on balance transfers offers are certainly back in force now, though.

I keep being pestered by one of my cards to transfer a balance for up to 18 months, interest free. There's a 3.5% fee for the transfer itself but when you consider that you are effectively getting an 18 month interest free, unsecured loan it is amazingly cheap.

I remember hearing a pretty good Radio 4 report (IIRC) where they explained that the business model runs off the statistics. The card providers extend lots of loans to 'card tarts' which make small losses because the debts are repaid in full before the discounted teaser rate resets to a profitable rate, often by the card tart moving the debt to another card provider and another cheap deal.

However, there's a tail of borrowers who screw up, by missing a payment for example. Their credit record gets a black mark on it. They can now no longer get a new deal from another card provider so if they don't have the funds to pay off the debt on the card at the end of the teaser rate period the whole balance resets to the standard rate (which is eye-watering) and now the card provider is making money hand over fist. The lender will have mountains of statistics allowing them to calibrate the how cheap they can make the lending whilst still ensuring that the losses on the card tarts who are getting it right are covered by the profits on the people who screw up.

The whole thing is rather beautiful in a perverse way and relies on the existence of credit scores which the card providers share with each other. It's a nice example of how competitors in a market can coordinate to outmanoeuvre their customers. If the card providers didn't share information on who had missed a payment, they wouldn't be able to trap the witless on the standard rate.

Edited by Bland Unsight

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The lender will have mountains of statistics allowing them to calibrate the how cheap they can make the lending whilst still ensuring that the losses on the card tarts who are getting it right are covered by the profits on the people who screw up.

The whole thing is rather beautiful in a perverse way ...

Yep, agree there's something about the whole model that beats me.

I used to card tart and get 2% or 3% for my money elsewhere, but recently I've given up on it. There's something unnerving about it, even though it benefits me. I'm (hopefully) not daft, I live frugally, track every penny and have savings, but I feel out of my depth.
Keeping on top of what money is where and resisting the temptation to spend on a 0% intro rate is a difficult one and takes mental effort. I decided that effort wasn't worth the £20ish a month I was benefitting from it. Wonder if the card companies attempt to inculcate that too to keep the card tarts away too?
I'm likely to buy a £2/3K car soon, it would make sense to use the 'free money' cards to do it and put my savings to better use but I think I'm going to stay away.

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There was chatter a couple of years back about making it compulsory to close the old card when transferring the balance away, in order to not free up available credit by transferring balances.

Not sure how far that idea got.

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