Credit Mad Britain
 

Where will it all end ?
Is this the sign of the boom and bust we had back in the eighties ?
I can remember Tony Blair saying that this government was not about boom and bust, well if it isn't Tony, what is it ?

Credit is all to easily available IMO.

I have just read this sad story which makes me wonder why people are allowed to get in such a position.

A very sad state of affairs indeed.

Re: Credit Mad Britain
 

This is a very sad story.

As far as credit goes, there are two sides.

My Boiler blew up (literally) this week and needs replacing at £800.

think I can get credit for this? can I F$%^

Re: Credit Mad Britain
 

What does the government have to do with people spending on credit cards again ?

I guess if it gets to be a major problem then they'll have to be laws passed to address credit services. That would be a shame though as the people who do keep thier debt's manageable would be denied a useful service. Unfortunately it seems as though many people do need a nanny state.

Re: Credit Mad Britain
 

I thought it was a Tory policy to allow people to run their own lives, and for governments not to interfere??

But you are right, it cant be sustained, people do need to learn that you do have to pay all that "free" money back :(

Re: Credit Mad Britain
 

The problem is that, at the moment there is insufficient regulation of the credit lenders so that it is too easy to a) get credit and b) get into serious debt.

Yes, ok, I don't deny that some people get themselves into trouble, but when there are people begging you to take their cards and effectively offering inducements (low introductory rates etc) to persuade you, it's not difficult to see how people can be suckered into taking out more credit than they can repay.

Of course by the time they *realise* it, they're so deep in the s$$t that there's very little they can do to get out without *further* borrowing.

Re: Credit Mad Britain
 

just hope that they dont introduce controls on borrowing like in the '70s.

limits like 1.5x salary for mortgages (if you are lucky), say goodbye to credit cards,

bring back the tin under the floorboards.

Re: Credit Mad Britain
 

IMO that wouldn't be such a bad thing, because it's about the only thing that is going to stop the housing market going even further out of control to the extent that we see another 80's style crash.

Too many people are already lying on Self-Certificated mortgage applications, saying they're earning as much as two or three times their real income, to get a mortgage, but if interest rates go up by another percent or two, they're going to find themselves in severe problems trying to repay their loans.

Re: Credit Mad Britain
 

Trouble is there is all this new credit with people consolidating loans. Does it take into account the loans that are paid off?

I think they should kill these adverts on day time TV "Consolidate your loans and reduce your monthy payments" why does it reduce your mnthly payments? cos your paying it over a longer period of time and paying more!!!! Too easy for people to get sucked into that one. They consolidate and then what do they do? Borrow more cos they can then afford too.

Re: Credit Mad Britain
 

there is no accurate figure for the amount of self certificated mortgages, although it sits at about 30-40%, most people rely on the interest rates to stay low, atthe current conditions of over borrowing through credit and mortgages, the assessment is rates will be going up.

Re: Credit Mad Britain
 

The real answer is to refuse to have a CC and to SAVE up for what you want.It seems like everyone thinks they MUST have a CC.Why? Surely the only credit one needs is the mortgage that you have on your home.Why go looking for any other credit?

We also seem to have forgotten how to save money for a rainy day.Mind the interest rates don't exactly inspire one to save but we should all make the attempt to save some money as and when we can.That way hopefully we can pay out for the unfortunate situation of a blown up boiler.

I also have some very important questions that I ask myself before I buy any item that isn't food.I ask myself do I need this item?Why do I need it? Can I wait until another time to buy it?
Quite often I can talk myself out of spending money on an item I don't really need or waiting until another time if I do.
I'm pleased to say that I owe money to no one least of all the greasy,groping loan companies and CC companies who are the very worst at leading folk onwards down the slippery slope by increasing credit limits without discussion,hiding behind complicated interest rates by using unclear,complicated jargon to confuse the unwary. :mad:

Sorry for the rant.

Incog.

Re: Credit Mad Britain
 

Absolutely! It cannot be allowed to go on.

Re: Credit Mad Britain
 

Nobody likes credit cards, but everyone is quick to use them. I think people who try and blame credit card companies should try take responsibility for themselves for once.

I think they are in the top 5 best inventions of the 20th century. This little piece of plastic means that in (I havent check my stats), I can use it in like over 250 countries around the world. No matter where I end up, even in the most destitute countries in the world, someone somewhere will take a CC. All you need is a phone line. People say the charges are too high, but they don't realise how many features they have. They do vary from card company to card company but i got a whole book of features with mine, and I haven't got round to reading it. Give you some examples: Every electric item I buy on it is automatically covered for accidental damage insurance; Any holiday I buy on it, automatically covers me for travel insurance. I dont have one but my mate told me not long ago, that his Barclarycard has a price match guarantee on it. He bought a hard disk, and promptly saw it cheaper somewhere else. Barlcaycard sent him a form, he filled it out, and got a £17 cheque back. But the holiest of holy features, is the Chargeback. Any time you get screwed over, the credit company will be more than happy to get your money back for you, even if they company you deal with isn't This has got many people who got screwed, there money back. A while back, I had to renew my car insurance. I paid for it on CC, and soon after the company folded, and the ombusdman said the underwritters only need to pay out 90% of my claim, even though I had fully comp. A couple of calls, and a fax later, I got all my money back. If I had paid by cheque? Nothing.

Think of online shopping, and how you would do it without a CC. Send cheques to America and Australia? What about the currency difference?

Because of all the features, I use my CC all month instead of my debit card, and then just pay the bill off at the end of the month. Just imagine life without them. Terrible isn't it?

People like that guy, who run up a £70,000 CC bill. I can't for the life of me think how he'd get so far in debt, but if it wasn't for credit cards, i'm sure he would of gone to a loan shark or the like.

Re: Credit Mad Britain
 

Very good post. We buy everything on cc and pay it of when the bill arrives. We get free insurance (as you said) and 'nectar' points :)

Re: Credit Mad Britain
 

Credit cards are essential if you want to manage your money and get security with your purchases, but you have to know how to use them properly.

I have a rule that we don't buy anything unless we can afford to pay cash for it, usually cash means putting it on the credit card and paying off the bill in full by direct debit. Sometimes we use hard cash if we get a better price by doing so.

What we do is budget for what we are going to spend in the future. Nearly everything you own needs replacing at some time. What we do is work out how long we think something, say a fridge, will last and work out how much a month we have to save to make sure that we have the cash to buy a replacement when the time comes. We tend to under estimate the life of most things so we are covered in case of early failure. This money we put in a savings plan so that it is earning interest. Doing this we are never in the position of a major item failing and we haven't got the cash for a replacement.

Re: Credit Mad Britain
 

simple the money you dont have you dont spend, i intend to keep away from credit cards forever, at the moment this is the case, if banks try to push you services such as credit cards you simply say 'no put your foot down and tell them.

the temptation of a credit card is too strong for some, the majorty of the blame lies with the consumer for over spending, then the banks for upping credit limits and sending gold cards out, sometimes without the request of the customer.

if you have one and spend, you should not moan and cry help for bills you caused it yourself, the harsh reality is, 'you reep what you sow'

Re: Credit Mad Britain
 

1. All lenders come under the scrutiny of the Office of Fair Trading or Mortgage Code Compliance Board or Financial Services Authority.

2. Whenever someone gets into trouble, they always have brought it upon THEMSELVES.

3. It is quite simple to simply shred the "pre-approved" platinum card application you know. Nobody holds a gun to your head and makes you fill it in.

4. Anybody who borrows tens of thousands on CC's and is daft enough to believe it doesn't need paid back is stupid enough to go to a money lender instead.

5. If you think CC's have a high interest rate....

Re: Credit Mad Britain
 

Don't believe everything you see on the BBC.....

Re: Credit Mad Britain
 

How does it reduce monthly payments?

Quite simple

1. You owe say 20K on a card at 18.9% ( a typical rate)
2. If you make minimum payments (2-3%) that will take in excess of 16 years to clear.
3. Switch to a lower card (there are ones @ 9.9%), the interest you are being charged is simply cut in two. Still takes 12+ years to pay off mind
4. To *really* save money, remortgage down to 4+%, interest being charged is cut by a factor of 4.
5. Yes you are paying for it over the length of the mortgage, but you WERE DOING THAT ALREADY....
6. The really *SMART* thing to do, is not to take all the savings, leave some of it on the table and pay the entire mortgage off early....

..and yes, it is my job.

Re: Credit Mad Britain
 

I work in the mortgages industry, in the area I work, the level of self-certs is less than 10%.

People are NOT allowed to over borrow on mortgages, it is strictly regulated (by the mainstream lenders) and there is a limit on what you can borrow.

Earn less than 20K? - 3.5x salary plus second salary
Earn more than 20k? - 4x salary plus second salary

Re: Credit Mad Britain
 

thats in your area, i was talking about the total number.......


lenders regulate ?

your having a laugh :D

no people easily get away with getting them through brokers, some get them through lenders who DONT do the necessary checks

Re: Credit Mad Britain
 

The smart thing to do if you owe £20k on CC is to take up the introductory offers. It seems like regardless of time, there are always a number of credit card companies that will offer 0% on balance transfers, for either X months or if you're lucky, for the life of the balance. Surely, if you don't mind a bit of paperwork, you can punt your balance around from card to card, and never pay interest again?

Re: Credit Mad Britain
 

The thing is, *I* have a self-certificated mortgage, but that's because, when I took it out, I was self-employed and, as such, didn't have the three years of business books that mortgage companies were demanding.

However, having said that, I didn't extend myself beyond my means (in fact quite the opposite), nor would I ever do so, because I've got more financial sense!

Re: Credit Mad Britain
 

It's not quite that simple though.

For instance, as I'm sure I've mentioned before, with a credit card, if you buy something between £100 and £30,000 , you get the protection of Section 75 of the Consumer Credit Act which makes the card issuer *jointly and severally* liable for the purchase.

This means that even if the company you buy from goes bust, you can still claim recompense from the card issuer.

Whereas I *do* owe money to a CC Company, but only because, when I moved into my new flat about 2 1/2 years ago now, I ran up all my debts onto my credit card, however from then on every six months I've been shifting the balance onto another 0% deal card which means that I've been paying off the minimum amount and had the equivalent of a £4000 interest free loan for that period!

Oh, and the money to pay it off is sitting in an account currently getting 3.75% gross interest...!!

I also have another credit card which I use if I need to buy a "big" item, or something from abroad etc, but I use the "up to 56 days interest free" period to the maximum, then pay off the balance at the end of that time!

Credit cards etc are not necessarily a bad thing, you just have to know how to make the system work for you :D

Cheers,
Graham.

Re: Credit Mad Britain
 

Just a point, however, "nectar" points and other such schemes are, frankly, virtually worthless.

If you look at just how much you actually have to spend to get anything worthwhile you'll realise that the return is a fraction of one percent, which is even worse than the "money back" schemes that pay 0.5% and are only useful if you spend huge amounts on your card.

Re: Credit Mad Britain
 

Yes, however some recent debacles have shown how poor that scrutiny can often be.

That is IMO excessively harsh. Lenders often use what can best be described as "confusion marketting" techniques.

For instance if they give you a card that offers "0% on balance transfers for 6 months" how many people would look for, or *know* to look for something that says that if you pay off any amount on the card, it goes to pay off the *transferred* balance *first*, whilst all new transactions are running up interest?!

If you do not *ask* for an increase in your credit limit on a card, you should not be *offered* an increase. Nor should you even be given one without asking! (On a related point, some years ago, Nat West kept trying to up the "credit zone" on my bank account, whether I wanted it or not).

A lot of people simply do not *realise* how quickly debts can mount up until it's too late.

Yes, I know there are store cards that have 30% plus interest rates. There are also "roll up" home equity release schemes that have left people tens of thousands of pounds in debt because they weren't told the full details before they took them out.

To blame people for falling for these sorts of things without levelling equal or much greater criticism on those who peddle them is, IMO, simplistic.

Re: Credit Mad Britain
 

If you have cites to contradict this, please, let's see them.

The fact that The Money Programme was able to go into half a dozen different brokers etc and get specific instructions on how to fiddle the self-certification system is pretty telling.

Re: Credit Mad Britain
 

However you don't point out that there are two important assumptions in the above scenario:

1) That you *own* property that you can mortgage and

2) That you're willing to take the risk of losing that property if you can't make the payments.

I'm not saying it's a bad thing, but these things *do* need to be considered.

Re: Credit Mad Britain
 

Yep, this cloned tory government we have now will have to introduce some laws regarding borrowing methinks, unfortunately a lot of people need to be guided at times rather than run their own financial affairs.

Re: Credit Mad Britain
 

I'd be happy to see further regulation of the finance industry brought in, but I didn't think people wanted a "nanny state"!! :erm: :(

Re: Credit Mad Britain
 

There is a difference between a "nanny state" saying "you shouldn't see/ watch/ do that because it's bad for you" and the state regulating an industry which seems intent on forcing you to play "find the lady" if you want to use their products at all.

Re: Credit Mad Britain
 

Sorry Graham, I don't see the difference, the info is there if you look, they have to provide you the facts by law, if you don't check up on what your being told thats your fault. Although I confer on the "confusion marketing" theory.

I also agree that the financial market need more regulation but people that argue against a nanny state can't have it both ways :)

Re: Credit Mad Britain
 

just out of curiousity , i earn roughly 25k / year , wife earns roughly 5k / year , so that means we could get a maximum of 105k mortgage , roughly how much does that work out per month

Re: Credit Mad Britain
 

True but every bit helps :)

Re: Credit Mad Britain
 

Have a go at the calculator - Here M8. :)

Re: Credit Mad Britain
 

thanks for that , just as i thought , if i borrowed the maximum i am allowed it would swallow up almost half my monthly income , then all i would need is the interest rate to go up a couple of % and that would be it :Yikes: :Yikes: :Yikes: :Yikes: :Yikes:

Re: Credit Mad Britain
 

Erm - I like my credit cards thank you. :)

Re: Credit Mad Britain
 

Which is the point I'm trying to make. It's not just a matter of the information *being* there, it's that it's *understandable* to the average consumer.

If it's buried deep in the very small print or couched in impenetrable financial speak, even if you *know* what to look for, it's going to be difficult for anyone to make sense of it.

But it's not "having it both ways". Regulating an industry that is selling stuff to the public is not the same as *telling* the public what they should or shouldn't do or buy.

Re: Credit Mad Britain
 

SHOCK! HORROR!

For once I agree with Graham.He speaketh very good sense. :Yikes:

Incog. :)

Re: Credit Mad Britain
 

Staggering >>>> Link

I can see the country going along the lines of boom & bust if this carries on much longer.

£1 Trillion on credit beggars belief

Companies & Banks offering credit should be guided by stronger credit laws issued by the government, that sounds a bit "nanny state", but at least it should put the brake on further indebtedness, or the rest of us will have to help out by paying higher interest rates.

Its ok if people have a bit put by, but it is the interest rate that keeps going up for my mortgage that is very worrying.

Re: Credit Mad Britain
 

i fear the same tbh :disturbd:

Re: Credit Mad Britain
 

I read somewhere recently that about 70% of this is actually revolving and cleared monthly, we now also have a culture of charging everything to earn the reward points, carry less cash and then pay it all in a lump sum at the end of the month.

Re: Credit Mad Britain
 

I'm currently looking for a new house and applied for a mortgage "agreement in principle".

I've had no problems except that, because I've got a £3000 balance on a credit card the mortgage company has said they'll lend me £3000 less than I asked for.

They don't seem to be interested in the fact that a) I've been transferring that amount around 0% deals for the last three years (originally it was £5000 quid) and b) the money to pay it off is sitting in another account earning interest :rolleyes:

Re: Credit Mad Britain
 

In that case I would go to a different mortgage lender. Screw 'em.

Re: Credit Mad Britain
 

They're offering a better deal than anyone else at the moment.

Frankly it doesn't matter a damn to me, it's just that in the context of the topic, what people have in savings doesn't seem to get reckoned into the equation.