debt and borrowing

[kronas]

the treasury select committee has just completed its 71 page report on practices done by credit card firms

they have launched a scathing attack on the methods used by firms such as being passive and misleading customers

they have also been criticised for charging customers huge debt and loan repayment rates

the report also higlighted that firms should stop raising credit limits until the customer requests such a move

http://news.bbc.co.uk/1/hi/business/3327873.stm

not a shock and not a huge suprise yet people continue to use credit card firms that charge 8-9 times more then the bank of englands interest rates

i think this report is long overdue........

[Xaccers]

Credit card companies increasing your limit without your request is very sneaky, and is simply in the hope you will borrow more, or rather, have your credit score locked up with them.
A friend of mine would always pay off his card each month, and he'd constantly be battling with the card company to stop them increasing his limit as they were making no money out of him.
I have no problem with them writting to me to say "hey, as a valued customer we'd like to inform you that you could increase your borrowing by £500 just by calling this number" as then it would be up to me to decide if I needed it.
Sure you'll still get people who'll take it up when they can't afford it, but at the moment, you've got alot of people who wouldn't take it, but would spend it if it was just given to them.

Another thing is if you find you suddenly need an extra few quid near the end of the month (say you got a puncture in a couple of tyres) so you phone your bank and request a temporary increase in your overdraft just til the end of the month, and they turn round and say "well, lets keep it indefinitely and see how things go shall we?" again hoping you'll dip in to it again.

Store card interest rates are disgusting.
When I worked for BHS we got an extra quid for every card we got someone to sign up with. The APR was 29.9%!
We always made sure that if someone was interested in signing up (normally to take advantage of the 20% saving on that transaction) we'd tell them to make sure they pay off their first statement in full and then chop the card up as it's interest rate is astronomical.

Catalogues are another rip off credit scheme, which unfortunately are often the only option available to many low income families

[kronas]

Originally Posted by Xaccers

Catalogues are another rip off credit scheme, which unfortunately are often the only option available to many low income families

ive seen people who are not even on low income and still go and order from catalogues just because its 'conveniant' to pay weekly i look at some of the final totals and think what is the point they are charging you a high amount of 'interest' you may aswell save up and buy it because in the long term you will still save money

having said that catalogues are usally rip offs for normal prices compaired to stores

[Xaccers]

My gf wanted some shoes from Next, but they weren't out in the shops, you could only get them from the catalogue or online.
I bought them online, and was rather shocked when it said they were on their way without asking me for my credit/debit card details!
The shoes arrived, no details on how to pay.
It left me really concerned about what happens next.
Eventually I got a statement showing £29.99 for the shoes.
Where's the postage and packaging I wondered?
I phoned them up wanting to pay, asked about the postage, they said "your balance is £29.99 so that's all we want"
I paid.
2 months later got another statement saying I hadn't paid the £2.99 on my last statement and was being chaged 8p admin for it, and if I didn't pay imediately they'd send the baylifts round!
Some cheek! But hey, I knew I owed the £2.99 for the postage, they just hadn't put it on the first statement, I hadn't recieved a statement the next month (of course, having paid the previous one in full I wasn't expecting it), and I really didn't think 8p was worth fighting over.
But it does seem strange not to put the total cost on the first statement, I mean I was told that's what I would be charged when I purchased from the web, and they weren't interested when I asked about it after recieving my first statement.

People moan about the high rates of interest and the fact that they will increase your credit rating without you asking them. At the end of the day they dont hold you at gun point and make you use the card!!! Its all down to self discipline, credit cards are great for the 6 week interest free loan. Howver i do agree if credit cars weren't used then shops ought to be able to reduce thier prices, but do you honestly think that would happen?

[Xaccers]

Some cards (I know the BHS card we were pushing) only mentioned the APR in the very small print.
The same goes for shopacheque which my gf has had to use in the past.
Many people don't understand APR and having it hidden in the small print doesn't help.
But I agree, if people don't bother to take advantage of lower interest options that they are aware of and are available to them, then they can't really complain.

I heard an interview with one of the people who did the research about why they weren't pushing for a limit on interest rates.
Basically, if someone has many CCJ's and bad credit, and are considered a credit risk, then these high interest companies are their only option. Take that away and you leave loan sharks as the only people they can turn to, and then you are talking about rediculous interest rates, and broken legs.

I noticed the example on some consolidation loan company advert, something like repay £15000 at only £175 a month (or some other invitingly low number), it was over something like 25 years, so even with a low interest rate of 8% you still paid back about £40K!