We are responsible for our debts, but what about lenders?

angelica

I found this site by accident in September this year, and since then I visit it every single day to get new ideas how to save money and decrease my debts.

Due to personal circumstances and my own stupid attitude towards money my debt mounted in last six years to an astonishing figure of £110k. Fortunately I have good salary and can meet my payments, but I feel sick thinking how much interest money I pay to banks every single month I could use for something better. :mad:

Since I first came to this site I learned so much and changed my spending habits dramatically. I switched my car insurance to another provider, choose different gas provider, reduced my phone bills using 1899com etc etc. I managed to reduce the APRs on credit cards and loans, the highest being 18.9% to range of 4.9% - 7.9%. Thank you Martin and all experts on this site!

Debt and saving money issues turned to be my greatest passion since I started a process of my ‘personal finance re-engineering’. I even changed my management report topic. As I study part-time at well-known business school (which by the way is ‘responsible’ for £30k of my debt ), I have to write the management report to get a degree. Originally the topic was about merger of two huge American corporations, but the new topic I chosen now is very much related to this site, my own situation and the situation of many people on this board. I decided to write about ‘Over-indebtedness of nation as Britain’s biggest burden and responsible lending’.

We all know how scary the situation with debt is in this country, and how vulnerable people are, especially youngsters, to the tons of junk mail, advertisements on radio and TV etc about great credit cards’ and loans’ deals delivered to them every day. I agree that it is our responsibility to answer ‘no’ to inappropriate offers, but I think banks and financial institutions should also be more responsible.


I would like to ask for your opinion as you all are so experienced debt-fighters here. What do you think banks and credit card companies can do to educate people better about their credit products and what steps they should take to be more responsible lenders?

frosty

The banks and credit card companies are a business and are there to make money,they dont care whether people can afford the debt or not.Society needs to change its attutude to buying products,if you have not got the money(cash) to pay for it then you dont buy it,I feel sorry for future generations because they have seen their parents and possibly grandparents buying lots of luxury goods on credit,they assume like my sons do that people who have big cars,lots of holidays,big tvs ect are rich,they never think they might be in debt upto their neck.There is another kind of debt,when a relationship breaks up or you lose your job or maybe through illness,the list is endless,some times this debt is unavoidable and the banks and credit cards companies dont help matters with their high penalties,maybe they should be a little more understanding.

Dora_the_Explorer_5

So much to buy, so little time! Perhaps the underlying cause of self-inflicted debt is that many people are unable to tolerate delaying gratification.

paulmarks83

The worst thing i found is the credit cards keep increasing their limit when ever you get close to maxing your card out. Im 22, have a low paid job of 10.5 grand and yet have access to (and have used) nearly 20 thousand pounds of debt.

_pale_

super_mario_4

A analogy i once heard is that material goods are the drugs, lenders are the drug dealers and credit cards the needle

angelica

The banks and credit card companies are a business and are there to make money,they dont care whether people can afford the debt or not.

I totally agree, frosty. They are businesses and are there to make money, but as many companies in pharma, oil and even tobacco industries try to be more socially responsible should not banks and credit card companies to follow?

Many people nowadays invest their money only in 'good' companies and if more and more people will be like that, 'bad' companies will be in difficulties.

Banks and credit card companies make big loses, too when they give credits to people who cannot afford to pay back. I think it can be a 'win-win' situation for us, consumers, and for the banks if they will lend more responsibly. What can they do differently?

Im 22, have a low paid job of 10.5 grand and yet have access to (and have used) nearly 20 thousand pounds of debt.

This is really scary paulmarks83, I am very glad that you you found this site and had your 'lightbulb' moment so early in your life when a lot can be done to become debt-free and avoid mistakes in the future. :T But a lot of young people (and not very young, too) do not realise how difficult it is to stop using credit cards and slide deeper and deeper into huge debt. I could not stop for very long time even I knew that situation become more and more dangerous. I like the analogy with drugs, I definitely was a 'credit card addict' myself. :rotfl:

There a lot of info everywhere on internet, TV, radio etc about dangers of debt, but often people do not hear those words of wisdom before it is too late. How make people to hear? Should banks and cc companies include more educational info about dangers of debt into their application packs?

donnalove

well to me that mastercard advert makes it sound like you don't have to spend money, just use this plastic card
you know the one where he say's

"and for anything else there's mastercard"
just makes it sound easy

fruityslh

I've found that some people don't understand the difference between Debit & Credit cards, look at some bank debit cards, they have Visa on them. My mother in laws husband ran up £3000 worth of debt on a credit card from his own bank thinking that it was coming from his bank account, until my MIL found out.

Thefunkygibbons

I think that lenders do understand where people are at

I have found that they are no longer keen to lend me money, because I can afford it (I am a stoozer so all my credit cards are backed by the stooz pot sitting in a high interest account)

However, plenty of people who are struggling seem to find it easy to get more debt

Banks are in the business of taking you to the edge whilst trying not to push you over it

ffs

It's just a numbers game for them. They have targets to reach, very often there is little or no relationship between the sales divisions and the underwriting departments. The more credit is sold, the greater their income, sure there will be people like me who get in trouble, but for nearly twenty years I was contributing to their profits. They have a bad debt provision, if the economy makes a hard turn for the worse they may find their provision is insufficient, but the people who sold the credit have probably long since moved on. You and I are just figures on a balance sheet, there is no other relationship, and if you think there is you are sorely mistaken.

Percy_Vere

Interesting thread and one that pops up every now and again on a debt help website I occasionally visit.

As has already been mentioned, banks are in business to make money and they do that by lending us money and charging interest. So it follows that they want to lend us as much as they can before we get into financial difficulty. Asking them to stop is like asking Tesco to stop selling us say chocolate if we are putting on a bit of weight - not going to happen.

There is a very good argument for better financial education in school which hopefully would lead to less epople getting themselves in too far before they realise what has happened but in the majority of cases it is us as a society that is to blame with the 'want now - worry about how to pay for it later culture'. We need to take responsibility ourselves, blaming everyone else is not going to help in the long run.

I would also like to point out a misconception about this 'massive' debt figure in the UK of £1 trillion. Of that around 80% is secured on property which with the increases in prices over the last few years is not really at risk at all (caveat - possible reduction in house prices may affect people who have bought in the last 12 months). So that leaves £200 billion pounds of debt which is unsecured - not quite so bad when compared to the population. Also when does 'credit' become 'debt'. Bad debt levels with most Uk lenders are well below 5% - therefore only about £10 billion could be considered 'debt'.