[Closed] Credit card limits - why is it the CC companies fault...

You are correct. But an ideal world does not equal the real world, the latter being full of people with poor judgement, willpower or general ability.

Because if you have a shit load of debt on a credit card you need to be saved from yourself as it's about the worst form of debt.

Because having access to credit is an easy trap to fall into, CC companies know that increasing the limits increases the temptation to use it, that is why they do it.

It is like being asked to not eat the tube of pringles on the table in front of you, I didn't ask for them to be there, but know they are my willpower is too weak goddamit.

When someone is at or near their limit they should not be allowed to automatically increase the persons limit to encourage further bad debt.

Ive been in debt, paid it back now live within my means whilst saving.

Congratulations

You have a credit card with an agreed limit on it. You reach the limit. You really think that the best thing for you is that the Credit Card company ups the limit without any consultation or discussion about whether you want or can afford a higher level of debt?

If everyone had the willpower / self control / resources to live within their means then credit cards wouldn't exist!

Hey you owe a lot of people money and have no way of paying it back and will end in a spiralling pile of debt, have another 5k credit....

Who should say no? The person offering and profiting or the person with very few options left

Do you not think it's irresponsible to give people more access to easy credit, when they perhaps can't afford it?
Giving more credit to people who are already up to their eyes in debt doesn't seem like the most sensible thing to do. It just means those people can never pay off their credit card, so are constantly chasing the interest on the growing pile of credit.

Yes, people shouldn't spend what they don't have. Some people have no control, some people just don't budget well & other people who are really skint perhaps rely on their credit card to pay the bills at the end of the month....

I remember shortly after leaving uni, HSBC sent me a letter telling me they were going to increase my credit limit from something like £800 to £4000.
I very rarely used my credit card and if I did it was only to get some protection on the purchase, or as a buffer while I waited for money to be moved from a savings account (remember 3 days to transfer money...?) to my current account.
I told them to put it back down to the previous limit as I didn't need the extra credit, hadn't asked for extra credit and it exposed the bank to more risk should my card have been stolen or cloned.

They don't let people get into debt out of the kindness of their hearts, they are hoping to make money on the interest charges.

Still think it's a bad idea regulating such sneaky behaviour?

Vultures. Preying on the most vulnerable in society.

Banks are SCUM.

Some people find themselves in situations where using a CC is the only means of putting food on the table. The very poorest. These are the people that these animals are preying on. Get them into deb then get them into more debt. Debt that they dont care if they can afford or not, as long as they are getting the APR.

How they sleep at night is beyond me.

Drac - Moderator
When someone is at or near their limit they should not be allowed to automatically increase the persons limit to encourage further bad debt.

Ive been in debt, paid it back now live within my means whilst saving.
Congratulatios

This.

I work in this industry that provides the Credit Services. It's always been a tough one for me because I feel Credit should be earned and taken to a limit and end there. However, my industry doesn't always see it as that simple. As savings portfolios reduce and pensions get eroded, Credit is the next option to seek out increased revenue.
The fact is, up the limit and the user will dip into that limit..

Debt sales have been rife over the last 5 years as the Credit Crunch eased, so a lot of Big Names are now free to release Bad Debt books and seek out increased income..

And the circle is almost complete.

But, what I think the article is aiming at, is the Brexit fallout soon. Its a shot across the media to warn the public that all may not be rosy in the garden of the UK in a few years (it might, it might not you decide)

Ive been in debt

This is a good move.

I was once in debt, not earning much, and HSBC put my credit limit up to *twice my annual income*. They knew that, because they also held my current account.

I phoned and asked them to put the credit limit back down again.

One month later, they put it straight back up to twice my annual income. There was no mystery about what they were trying to do and why. They can f* off.

As a recent grad with a job, I remember my "new grad manager" or somesuch, calling me up to let me know she'd increased my overdraft limit and pre-approved me for a loan. Being a young ****t (as opposed to an old(er) one now) I was overjoyed. Took me a few years to clear the excess off that.

Point is the finance companies carefully profile people who they feel are most likely to screw up and they are the ones they hit. As alluded to above it's a cynical ploy to do people on the interest. Crazily, some cc companies will reject your application if your credit rating is too good. They only want those who will pay interest or default.

It's akin to putting a load of alcoholics in a room with free booze. They are scumbags and they should be regulated

The news story on the BBC this morning suggested that something might be done about the banks charging fees on overdue amounts and adding so much interest that the actual debt doesn't get paid off first. This can only be a good thing. Be surprised if it does happen though.

I agree with this.
I think the bigger crime is that they let you go over your limit, just so they can charge you. The banks can easily reject a payment, but they only do it to protect themselves.

unfitgeezer - Member
...in the news today credit card companies are being told off for upping limits on credit cards, I don't get why they should be told off, if you've got a credit card take control of what you're buying/spending ! Just because it has a higher limit doesn't mean you have to spend it !

[b]Ive been in debt[/b], paid it back now live within my means whilst saving.

Rant over !

http://www.bbc.co.uk/news/business-41082034

So safe to assume you do have some sympathy with people with debt then?

If everyone was a stoic as the OP, credit cards wouldn't exist. They really are the very worst kind of debt, but they're also the most popular.

It's not a level playing field really - on one side you have the low to medium informed customer, on the other some of the biggest organisations in the world, hundreds of sales and marketing people and multi-million pound advertising budgets. They're created the idea of "free money" 12, 24 even 36 month interest free periods - how the hell do they make any money from that? Even that consumer champion website Money Saving Expert seems to perpetuate the myth that you can spend a few grand on whatever you want and never pay it back or never pay interest on it anyway, you just switch from card to card for 60 years and let your executors work it all out.

It makes good sense for the government to reign them in, firstly money worries are one of the biggest causes of anxiety and depression and that causes all sorts of unpleasant and expensive problems for our society and economy.

Secondly, the banks often need saving from themselves, lending someone a years salary in some cases in insecure debt at 20% APR is bad business, the moment that person needs help every where they turn they will be told to go bankrupt and the court will award a reckless credit card co about SFA, they'll be lucky to see 10% of it, if that.

They are scumbags and they should be regulated

Perhaps by some sort of Financial Conduct Authority?

DezB - Member
The news story on the BBC this morning suggested that something might be done about the banks charging fees on overdue amounts and adding so much interest that the actual debt doesn't get paid off first. This can only be a good thing. Be surprised if it does happen though.

The FCA have been looking at "punitive" charges for years, it's only recently with the success of the PPI scam (my words) that the FCA have greater authority to do something about charges in general.

If it hadn't been for the PPI issues there would still be a look sideways at regulations, as is it's looking far better for consumers than it ever has.

Point is the finance companies carefully profile people who they feel are most likely to screw up and they are the ones they hit.

But either way, they definitely target certain people in certain circumstances.

jimdubleyou - Member
They are scumbags and they should be regulated
Perhaps by some sort of Financial Conduct Authority?

Ha ha.

But as a former Banker, let me assure you they get away with murder - the regulators just haven't got the resources the banks have.

If they did banking would be regulated like the tobacco industry - plain, boring packaging, clear warnings about what can happen and solid facts and figures.

Not an A4 glossy pic of people smiling like idiots arm in arm as they stroll down the beach in the Caribbean. Big bold lettering saying that can go out and spend £10k if they want because they're so responsible with their spending and you only have to pay back 2% a month it's all so easy and some tiny lettering at bottom saying how if you slip up, they'll hammer you for the rest of your life.

But as a former Banker, let me assure you they get away with murder - the regulators just haven't got the resources the banks have.

I work for a bank (a foreign one), but I'm not a banker. Apparently we were getting away with murder, but got caught and punished.

Trust in banks has obviously been misplaced - putting the customer first seems to have been put on the back burner for the last 20 years...

Example.

Lloyds are currently "overhauling" the way overdraft fees and interest are charged. This is planned overdrafts mind, not unauthorised ones.

So if you have a 2.5k overdraft with them and you maintain your account in good order, as of Feb next year your charges will triple.

No warning other than a letter.

So, they are actively targeting people already in debt, then putting the squeeze on them further by increasing charges against what they KNOW will be a debt that most will struggle to pay off.

They are ROBBING the most vulnerable people in society. Its a DISGRACE and I have no idea how they sleep at night.

I was in all sorts of debt years ago following a divorce and it drove me right to the edge. Like the OP, I got it all sorted and now am comparatively well off thankfully, however I wont ever forget just how much I was targeted and thoroughly shafted.

Example.

Lloyds are currently "overhauling" the way overdraft fees and interest are charged. This is planned overdrafts mind, not unauthorised ones.

So if you have a 2.5k overdraft with them and you maintain your account in good order, as of Feb next year your charges will triple.

Yep, it's been a bit of a blessing in disguise for us. Mrs Jay still has her (or had) her graduate overdraft, 5 years ago she graduated. £2000 and used every penny of it every month - it cost her £30 a month in interest, which was annoying but not enough for her to do anything about it. That letter changed everything.

Not only would it triple (or close to for her) rather than taking it out at a set time every month, they charged it daily - so if you were £1000 OD on the 15th of the month, even if you didn't spend a penny, you'd be £1003 OD the next day.

Anyway, gone now, paid off, it hurt, but it felt good.

Perhaps by some sort of Financial Conduct Authority?

😀

When Varley told people that they were foolish/stupid (or words to that effect) to use CCs (Barclaycard/visa) he was lambasted by all. How the coin has flipped....

Why didn't anyone ware us? Because when they did, folk got upset and cried "scandal"

Where's nanny?

Edit: sorry not Varley, it as Matt Barrett in 2013

Matt Barrett, the £1.7m-a-year chief executive of Barclays, which owns Barclaycard, admitted he did not use his or anyone else's plastic to borrow money "because it's too expensive". He also revealed he has been urging his four children not to rack up debts on their cards either. He is in charge of Britain's most widely held credit card - one in five of all UK cards is a Barclaycard....Mr Barrett conceded that credit cards were an expensive way of borrowing and they were not recommended for what he called chronic borrowing. He then went on to declare: "I don't borrow on credit card because it is too expensive." He added that he had given his children some advice: "Don't get too much debt on a credit card."

Strangely I received a letter from my bank last week informing me that my overdraft had been increased by 400%!

In the past I have been overdrawn but not for the best part of twenty years. My account is well in credit so why such a huge increase, or indeed any increase beyond accounting for inflation since the account was switched to whatever "sale of the month" was on at the time?

Lloyds are currently "overhauling" the way overdraft fees and interest are charged. This is planned overdrafts mind, not unauthorised ones.

So if you have a 2.5k overdraft with them and you maintain your account in good order, as of Feb next year your charges will triple.

Halifax are going the same way 1p for every £7 you're overdrawn taken daily.

the real question is why do we need to tell "professionals"* in an industry that its a bad idea to give more credit to folk who already cannot pay a smaller debt back.

* Lowey, and others, explained why we have to

Matt Barrett, [b]the £1.7m-a-year chief executive of Barclays[/b], which owns Barclaycard, admitted he did not use his or anyone else's plastic to borrow money "because it's too expensive".

I wonder why he doesn't use one?

A few years back I had heart problems and was in and out of hospital over a period of 2-3 years. I only worked about 6 months in this period and being self employed earned virtually nothing. Credit cards became a way of life, using them for day to day purchases and shuffling balances around to the latest 0% deal.
I was on the slab having my last angiogram when the cardiologist told me I'd need a Bypass and would be off work for a further 6-9 months.
The credit card debt was manageable at the time, but the prospect of earning nothing for a few months meant that it would soon become a problem.
I did as the Credit Card companies advise. I phoned up MINT to discuss my account and to request if they could freeze the interest until I was back at work. They couldn't, but they could waive the £12 monthly late payment fee, which was something...
A week later I received a letter from them advising that as my circumstances had now changed the interest rate was increasing from 6%pa to 39%pa.
A manageable (with a bit of luck) debt very quickly snowballed into a major problem and we ended up having to sell our house, which turned into a blessing in disguise...

"Because it's too expensive" ?

I once put a house deposit onmy cc to get a 0.5% cashback. Solicitor did not charge me a fee so i asked cc to max my limit. I think it wasaboit 30k so a 150 cashback.

Terrible system really, preys on the vulnerable

I have a credit card with the lowest limit they would let me have -£500- which I use exclusively for buying stuff on the internet/over the phone.

I set the limit deliberately low so that if it were scammed then the losses to me and/or the CC company would be limited.

Oh, how naive I was.... it seems that they allow spending greater than the limit I set without checking with me first. Apparently just in case I needed to spend more.......

I don't think credit card limits should be more than 1 or 2x your monthly income. Any more and it's going beyond it's intended use and being a very expensive type of long term loan.

At the height of the pre-credit crunch largesse Morgan Stanley gave me a cash back card with a limit of £10k! Absolutely insane, I was just out of uni and although I was lucky to have a good job it would have been a millstone around my neck if I'd maxed that out. Some of my mates did and suffered for years because of it.

Halifax are going the same way 1p for every £7 you're overdrawn taken daily.

Almost like they're the same company 😉

It does seem pretty mad. I can't even comprehend what the monthly repayments would be if I maxed my cards, I've never asked for an increase, but it's now enough to buy a nice car!

Be interesting to see the extent to which they regulate things, if at all!

Almost like they're the same company

I know who would of thought.

On the point of willpower and self control, how big an industry is advertising now? To what extent can we say we aren't responsible when there is one enormous industry devoted to saying SPEND SPEND SPEND and another saying HERE'S THE MONEY.

Obviously both can be ignored, but as alluded to above, perhaps it requires greater than average reserves of willpower.

p.s. What sort of business model is the 25 Month interest free card? I've used one already and probably only paid interest for a couple of months at the end until I had it paid off. I've just taken out another which will be used in much the same way. I guess they might have made about £100 in interest on the first one, and would probably make something similar on the second. Do they make a commission on transactions or something?

MSP - Member

Because having access to credit is an easy trap to fall into, CC companies know that increasing the limits increases the temptation to use it[i], that is why they do it. [/i]

Exactly that- when they identify a customer who isn't repaying their card, then offer them more credit, yes that's the credit card company's fault. If you approach it from "the customer should resist temptation" then it's understandable why you might disagree but when you come at it from the company's motivation and realise it was "let's target people who manage money poorly and leave balances in high-interest credit cards, and maximise their debt by offering them yet more lending", then that's reprehensible.

I have available to me something like twice my annual salary in unsecured lending. I don't use it, thank **** but how does that make any sense? If I limited them, I doubt I could even pay the interest.

Exactly that- when they identify a customer who isn't repaying their card, then offer them more credit, yes that's the credit card company's fault. If you approach it from "the customer should resist temptation" then it's understandable why you might disagree but when you come at it from the company's motivation and realise it was "let's target people who manage money poorly and leave balances in high-interest credit cards, and maximise their debt by offering them yet more lending", then that's reprehensible.

If they target people who manage money well, leave zero balance each month, and minimise their debt, there is no business model. That's just free credit (if no annual fee).

I've experience similar to Loweys and suburbanreuben. When I lost my business, and just about everything along with it, I ended up in all kinds of financial trouble. With 2 kids and no income I didn't really y have a choice but to bang living costs on Credit Cards. That was 7-8 years ago. I'm still paying it off now.

The banks are parasites who actively target people in financial difficulty, then pile on the interest and charges when they get into trouble to well and truly screw them. A few thousand in debts, when you're in no position to repay it, can end up costing tens of thousands in the end. And thats high street banks. Their whole business model is set up to bend you over and go in dry.

Its worth noting that with the limits now placed on payday lenders - who we are reliably informed are scum - lending off them is now cheaper than going into an overdraft with a high street bank. So you're actually better going to Quickquid, or whoever, than Barclays or Nattiest for credit

Talking about willpower is just bollocks. The idea that everyone is just going out and buying new cars on their credit cards is utter rubbish. Some, maybe. But not most

Contrary to what the gobbler, more self-righteous and sanctimonious on here like to think, we live in a country where wages have stagnated for over decade, or in some cases shrunk, yet costs still go in the opposite direction.

Throw zero hours contracts and the gig economy into the mix, and a lot of people are now dependent on credit to pay household bills, and get by from week to week. Most people in poverty in this country are in work. In fact a lot are working 2 or 3 jobs on minimum wage. They're just invisable to the people who start 'what company car?' threads on internet forums

The banks know this full well, and are preying on the poorest and most vulnerable in society to flagrantly profiteer. Its absolutely shameful. But with the politicians in the pockets of the bankers I wouldn't expect anything to change. They're gleefully shafting people left right and centre. With a tactic nod from those in power, who rely on them keeping the credit taps turned on to cover for their abject failure and our growth-free (unless you're already minted) stagnating economy. God help us when Brexit truly hits!

...in the news today credit card companies are being told off for upping limits on credit cards, I don't get why they should be told off, if you've got a credit card take control of what you're buying/spending ! Just because it has a higher limit doesn't mean you have to spend it !

Ive been in debt, paid it back now live within my means whilst saving.

I doubt it will catch on though.

If the big UK banks took responsibility for their actions from 2000ish to 2008 they'd[s] mostly[/s] all be bust. So if the people the banks offer unsustainable credit to "take responsibility" then the banks make money. If they don't, and default, the banks get bailed out and continue to make money. Brilliant.

Edit: the point is banks are scum. Scum that can't be trusted.

teamhurtmore - Member

If they target people who manage money well, leave zero balance each month, and minimise their debt, there is no business model. That's just free credit (if no annual fee).

Correct- the business model is all about irresponsible lending and tempting people you know you shouldn't, which is why it's right that they be held responsible for that.

Having worked in a bank (Barclays) for just over 3 years back in the bad times ('05-'08) I have no sympathy for the credit card companies on this.

As others have said above, they use the continuously increasing credit limit as a way of tempting you to always be paying interest on as large an amount as possible. I saw first-hand the way they would start someone off with a small limit, say £500, then up it over time so that people would use it. If the amount got a bit too much to cope with ie minimum payments weren't being met they would then call the customer and try an get them to convert their balance into a loan as that way they would be paying it off. But they wouldn't cancel the credit card or reduce the limit so the whole cycle would start again. It was my refusal to be a good boy and push sales on people who couldn't afford it that lead to me leaving.

I bought into this debt cycle when I was young and, as I've said on here before, ended up with a lot of debt and very little to show for it. I had two cards that had credit limits double my annual salary [b]ON EACH ONE!![/b] It took a long time to pay it all back, with lots of sacrifices made along the way.

I changed banks a few years ago and one of the criteria I used to decide which one was their attitude towards debt and saving. Only one stood out as responsible: Nationwide. They don't like to see large loans or big credit card limits. They don't incentivise staff to sell loans etc, they reward good customer service so I went with them and they have yet to try and get me to take out a loan, credit card or overdraft.

We as a society need to take steps to protect the people who cannot or refuse to see the problems they are leading themselves into. There are enough ways for people to buy stuff on credit with 0% on sofas, TV's etc (even credit on cheap stuff at Argos!!) to get them into trouble without encouraging them to live on credit for food, fuel and small purchases as a way of life. Sorry to rant but I feel very strongly about this.

f the big UK banks took responsibility for their actions from 2000ish to 2008 they'd mostly all be bust.

Mostly is an exaggeration

Correct- the business model is all about irresponsible lending and tempting people you know you shouldn't, which is why it's right that they be held responsible for that.

No it isnt - and IIRC you worked for one of them (that did need help again IIRC) so you should know.

They are providing unsecured credit. By definition, that is going to be more expensive than secured credit. If they do this irresponsibly they get burned (but it is a tiny part of UK credit and a lot provided by non-banks right now).

[but accept that they do behave irresponsibly at times- but its a wild exaggeration to say that this is their business model]

We've got the went-too-far-in t-shirts - took a sizeable loan from the inlaws to clear it and make headway into repayment.

Believe me, owing money to your inlaws is WAY worse than a faceless corporation who won't use every opportunity to remind me of my impecunious past. Even years later.

Now, these days I earn the sort of salary that permits the lifestyle I aspired to back then. And I'm not afraid of credit (just spent a large amount on something and have used a zero percent, zero fee card to pay for it - because I want to keep the cash in the bank for a rainy day).

I'm lucky - I earn a decent amount more than average and have been lucky to learn my lesson and survive it.

Not everyone is in such a fortunate position - so yes, the banks are irresponsible.

teamhurtmore - Member

[but accept that they do behave irresponsibly at times- but its a wild exaggeration to say that this is their business model]

You literally just said it was- "without targeting people who don't manage their money well there's no business model"

No I said this (although I appreciate that you do like to misquote to create a false argument):

If they target people who manage money well, leave zero balance each month, and minimise their debt, there is no business model. That's just free credit (if no annual fee).

...which is correct.

If you manage you money well you would never borrow on an unsecured basis. You would simply use the credit facility. Why not? Its free and very convenient and improves personal cash flow. Borrowing on a CC is a last resort - leaving aside shadow banking - because is is very, very expensive, especially now.

If you leave zero balance, the bank is effectively paying you to take its credit. Yippee, free money from banks. How often do you get that?

So we see, the business model is very clear. I take it back about thinking you worked for HBOS before, excuse me.

There was no misquote, I paraphrased for breviity but here are the 2 statements:

"[b]If they target people who manage money well, [/b]leave zero balance each month, and minimise their debt, [b]there is no business model[/b]."

"without targeting people who don't manage their money well there's no business model"

No misquote, no misrepresentation. Not for the first time I have to tell you to stop lying about what I've said. Now let's get to the point:

Targeting people who don't manage their money well, and encouraging them to borrow more at high rates, is irresponsible, as Citizen's Advice have said. And you admit that the business model is targeting people who don't manage their money well.

You say, "If they do this irresponsibly they get burned" but that's simply not true. Often a bank can lend irresponsibly and it's the customer that gets burned, not them. Are you working to a definition of "irresponsible" that means "bad for the bank"?

"Not for the first time, i am lying about what you said", is what you mean. But if it makes you feel better, carry on. The misquote is obvious, and I assume the (mis)use of the word literally was intentional too.

You could have said:

"You [b]literally[/b] (sic) said, if they target people they have no business model." It's as (in)accurate as the rest of your post.

I forgot that you didn't work for a bank. When someone defaults, the loan becomes non-performing, they don't get paid and they have to put 150% capital against the exposure. In my mind that is getting burned, but I appreciate that you have different interpretation of reality and what people say (or to be more accurate, don't say).

Tell me where I misquoted or misrepresented you. If it's so obvious then why can't you do it? The 2 statements are right there side by side, everyone but you can see that I represented your comment accurately.

The last paragraph is just classic THM dancing away from the point while pretending you're addressing it. You said

"They are providing unsecured credit. By definition, that is going to be more expensive than secured credit. If they do this irresponsibly they get burned"

I pointed out that this isn't true. You've come back with an irrelevant diversion, and just avoided actually dealing with what I said, which is that contrary to your post a bank can lend irresponsibly and not get burned.

Well done. In addition to badly and incorrectly paraphrasing what I said* - deliberately or otherwise - you are now simply demonstrating a remarkable failure to understand howcredit card markets work and what happens when they don't. Bravo that's quite an acheivekmemt is such a few posts.

* a common theme now, so not unexpected.

Just as expected, can't actually say where this supposed misrepresentation is.

And the rest of the post is more of the same, just sneering while you refuse to engage, as if it's somehow the other person's fault that you can't address the actual point, which is that companies obviously can lend irresponsibly and not be burned. Irresponsible doesn't mean "leads to a loss".

😯

What sort of business model is the 25 Month interest free card? I've used one already and probably only paid interest for a couple of months at the end until I had it paid off. I've just taken out another which will be used in much the same way. I guess they might have made about £100 in interest on the first one, and would probably make something similar on the second. Do they make a commission on transactions or something?

For every astute person who pays off the balance and effectively enjoys free money, there will be many others who take the money and just pay the minimum balance, or who find their ability to repay isn't as much as they thought. These people, some of whom get trapped paying SVR on massive balances, are the cash cow for the CC companies. Even if some of them default entirely, the constant stream of fees and interest from the others significantly outweighs this.

The people exploiting the interest-free periods are the loss-leaders.

Will you two just get a room 😆

We could, Binners, but NW would misread the room number and end up arguing in the empty room the floor below 😉

Indeed Martin - plus transaction fees (interchange fees) which are typically 1-3% of the transaction.

CC companies make money in three ways

1. Interest
2. Fees charged to cardholders
3. Transaction fees paid by business that accept credit cards
4. [s]being irresponsible[/s]

I pay off every month, the card I have is for internet and phone use only. The issuer did offer to increase the limit - I declined for just this reason. I'm sure the bank also makes money by charging the shop or supplier a percentage, and perhaps there's the slightest delay in crediting them the money.

Can anyone confirm, or am I sponging off bank's shareholders and their in-debt customers?

1. Interest
2. Fees charged to cardholders
3. Transaction fees paid by business that accept credit cards
4. [s]being irresponsible[/s]

The point being that it is clearly in the CC company's interest to maximise the number of cardholders who are not in the position to clear their balance in a timely way, but who can service the debt on a monthly basis. And it is in their interest to bring the level of this debt to the maximum that individual cardholders can service without defaulting.

Also, if you increase the available balance, some of those who previously were clearing it easily (and earning nowt for the CC co.) may overstretch slightly and find themselves merely servicing it, which draws them into the cycle of monthly balances and profit.

I daresay there will be some finely-crafted algorithms picking out those who are most suitable and how much they should be offered.

It may not be publicly acknowledged, but converting solvent households into servicers of barely-manageable debt is clearly the aim of the industry's marketing practices.

Sadly, it is the role of govt and the regulator to drag lenders to heel every now and again, as they did with payday lending a few years back. The CC companies are being irresponsible, but socially rather than to their own shareholders.

The Payday lenders missed a trick. Had they made themselves 'too big to fail' then they'd still have been allowed the freedom to do what the bloody hell they like, with the taxpayer there as guarantor.

The idea, given their practices, that the banks are in any way morally superior to payday lenders is ludicrous!

The PPI scandal (amongst many other things) happened because the banks, having purged themselves of anything remotely resembling principles decades before then arrogantly adopted the same attitude to legality.

And having effectively got away with that, and crashing the entire global economy, with absolutely no sanction, I don't think for a second their attitudes have changed, hence once more plumbing the depths.

It's still the same 'who gives a ****' attitude to the consequences because for them there are no consequences. They know that if they repeat the same reckless folly that led to the last crash, they'll be bailed out just the same, as absolutely nothing has changed. The taxpayer is still ultimately on the hook for the bill. So they can still do what they damn well like.

As well as credit cards, they're also fuelling a pretty murky ask-no-questions attitude to PCP car finance, which some financial experts are warning is storing up another potential 'sub-prime' mortgage style disaster

The point being that it is clearly in the CC company's interest to maximise the number of cardholders who are not in the position to clear their balance in a timely way, but who can service the debt on a monthly basis. And it is in their interest to bring the level of this debt to the maximum that individual cardholders can service without defaulting.

Clearly. Income source (1) is critical. It's the majority of income for CC companies. Their business model doesn't work if people pay of their balances in total very month.

Having people who clear their balance every month cuts (1) and having people who cannot service their debt cuts (1) and leads to the problems I listed above

FWIW the BoE and the PRA have published their analysis on the cc market several times in the past few months.

You would hope that regulators are getting better at spotting the point at which 'mere' social irresponsibility becomes market irresponsibilty.

teamhurtmore - Member

We could, Binners, but NW would misread the room number and end up arguing in the empty room the floor below

Nice, so you're going to refuse to actually answer the questions, fail to point out where this supposed misquote is, fail to address the point that irresponsible lending doesn't necessarily lead to a loss for the bank- but still somehow find the time to make snide digs. Pathetic.

I am arguing in an empty room but only because you prefer to stand in the street outside and tell everyone about how you'd be winning, if you only turned up.

morally superior

You know what really really twists my tits? The current round of adverts from banks purporting to be "with you through thick and thin". They even tell us they have specialist teams to help with cancer patients.

Shame they are not in the least bit interested when their actions get people into unmanageable debt.

Its coming.. all over again...

[img] [/img]

They are flagging their concerns right now, Martin. As I said both the BOE (see their latest Financial Stability Report) and the PRA which is very clear where the risks are. The are requiring submissions from CC companies now and are highlighting that lenders are more vulnerable to losses right now. They are also specific of the risks associated with long term 0% promotional offers.

Sorry NW you are still on the wrong floor, asking the wrong question. Plus ca change

They are also specific of the risks associated with long term 0% promotional offers.

Problem is that the bubble is now reliant on the free flow of new credit deals to keep those at the default boundary ticking over. BoE/PRA can only lever the situation by drying those up which will send defaults through the ceiling as customers who can't afford SVR end up trying to pay it.

The lack of restraint (irresponsibility) on the part of the CC industry may be irreversible already.

Its coming.. all over again...

Time to roll out...the eyebrows!

[img] [/img]

Perhaps, we shall see. But looking at the data right now (updating databases after hols)

CC growth peaked already (but remains fastest growing segment of UK household credit)
It represents only 2% of outstanding credit
The bigger risks probably lie in the motor finance segment not CC. The former is the fastest growing segment in UK household credit right now and looks vulnerable to losses to me. Beware the second hand car market!!!

teamhurtmore - Member

Sorry NW you are still on the wrong floor, asking the wrong question

And you are just repeating yourself and evidently don't have anything of substance to back up your false allegations. but lack the integrity and selfrespect to apologise. It wasn't always thus

😯

Basement now.

Been spend a fair bit on the credit card this month, holiday and new bike for mrs plus car insurance. As usual it will all be paid off at the end of the month but a letter arrived today saying my limit had been upped. Looks like they are trying to draw me into paying interest!!!