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Credit Card Correlation


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First off I want to say that I really enjoy your website. This is my first post so I hope I don't step on anyones toes.

I run a mortgage website and am constantly looking for information on the UK property debt market.

Recently I found some very interesting data on the credit card stats in the UK.

The basic of these findings are that credit card lending is on the decrease for the first time in a number of years. This debunks the theory that the market could be going to all hell. People may be wising up and saving money for a change.

Maybe my economics isn't as good as some of the people on this forum but I would like to know what you think about this trend?

Thanks

John

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The basic of these findings are that credit card lending is on the decrease for the first time in a number of years. This debunks the theory that the market could be going to all hell. People may be wising up and saving money for a change.

Thanks

John

People are probably consolidating higher rate borrowing (credit card) for lower rate borrowing (loans and mortgages) in my opinion.

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I'd say that the removal of free credit for rate tarts has been an incentive for rate tarts to change their borrowing habits. i.e. 0% on balance transfers for 6 months is no longer 0% (apart from the Post Office credit card) because lenders now charge a 2.5% transfer fee, which equates to 5% annual interest. This is only slightly cheaper than a loan or a mortgage - which are both less hassle regarding paperwork, hence loans/MEWing are being increaingly favoured.

0% on new purchases for 9 months is still widely available though, so if one's disciplined one can still obtain some completely free credit - but this limits the amount one can borrow for free to approx 9 months' of living costs payable by credit card.

Edited by bugged bunny
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The unsecured debt is just moving to secured debt. Most mortgage lending is remortgaging.

Look at http://www.creditaction.org.uk/debtstats.htm

I did a banking course at college back in 1990, and one thing the tutor said to us was.

Never ever turn an unsecure debt into a secured debt. It may seem like a good idea, but it rarely is. Many people who struggle to pay an unsecure debt, will still struggle to pay the secure debt, but with far greater consequences.

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a drop in growth, but the market is still growing at 1/2%. Credit cards are becoming less attractive as balance transfer fees disappear, i am getting rid of 2 credit cards i no longer need...

You say credit cards that you no longer need. Does this mean that you will be keeping some credit cards and that you need them? I'm asking, not to judge, but to better understand, as I came to the conclusion that no credit cards are necessary. I'm curious to know if there are any situations that credit cards are necessary, or a prefereance to saving. I ask this with complete neutrality, and imply no judgement.

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You say credit cards that you no longer need. Does this mean that you will be keeping some credit cards and that you need them? I'm asking, not to judge, but to better understand, as I came to the conclusion that no credit cards are necessary. I'm curious to know if there are any situations that credit cards are necessary, or a prefereance to saving. I ask this with complete neutrality, and imply no judgement.

Credit cards can help saving. I pay a large proportion of my bills with credit cards, and then pay off the entire balance at the end of the month, paying no charges or interest. The money that would be paying for those things stays in my account longer and gives me the interest, minimal I know, but it's something for very little effort.

I originally started doing this in my teens as I thought I'd need it to build a credit rating (which is probably nowhere near as someone who's debted to the eyeballs.)

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