Consumers turn to Plastic !!

sabretoothtigger

Yea in theory I could deposit 200k into my bank account via credit cards and buy a house in cash. So long as I got a sale like a week later it would be all good or maybe I could move in 20 illegal immigrants and charge them rent for the repayments and become a credit card funded robber baron

Can the companies you apply to tell how many cards you've got, Ive actually lost track of all mine. A couple of times amex closed some of theirs down for me automatically so I could use a new card of theirs.

Theres a guy in the states who holds the record and has hundreds. All the county banks out there offer them, MBNA stands for: Maryland Bank, National Association
The reason for their sucess is they do not hold the debt, they resell it in the same way sub prime debt was sold onto others.
Hopefully everyone who bought knew that is was risky credit card debt or it would be another ticking debt bomb with this looming recession causing effects similar to the house price crash

amcluesent

>causing effects similar to the house price crash<

I'm expecting the credit system to collapse for the reasons peeps have outlined. Keeping a few thou ££ in cash in the safe makes sense.

WTF?_2

amcluesent wrote: »

>causing effects similar to the house price crash<

I'm expecting the credit system to collapse for the reasons peeps have outlined. Keeping a few thou ££ in cash in the safe makes sense.

Already, problems emerging in Russia with businesses refusing to accept credit cards:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3269843/Russia-begins-to-refuse-credit-cards-in-worsening-global-financial-crisis.html

Several Moscow city centre restaurants are now refusing to accept cards in a move not seen since Russia's last financial crisis almost a decade ago.Some automated teller machines at Sberbank, the country's biggest state-owned bank, have also stopped accepting cards from other banks.
Several electronics and mobile phone stores said they no longer accepted credit card purchases.
Over the weekend, Aeroflot, the biggest Russian airline, announced it had stopped taking credit cards payments for flights except from a handful of banks.

Might not be that long before we see the same sorts of things here. Anyone who thought that the crisis was over and done when the banks were promised hundreds of billions of aid is going to be in for a shock, I reckon.
Definitely a good idea to keep some ready cash. I took out a month's worth of typical expenditure in cash during the days of the most recent crisis for emergencies and I'm chucking in more twenties, tenners and fivers on a regular basis (if I'm down to the point where I know I'll need to go to an ATM the next day I'll put what money I have aside and go immediately).

Downsides of course are risk of robbery/fire and lack of earned interest, though with the way rates are going the lack of interest (taxed at up to 40% too) isn't going to be a real worry.

mewbie_2

!!!!!!? wrote: »

Downsides of course are risk of robbery/fire and lack of earned interest...

I'm a bit ahead of you there !!!!!!, think I've covered all the angles. Written a large cheque to myself which I keep under the mattress - if it's stolen they can't use it, if there's a fire I can just write another one, and as for interest - here's the clever bit - the money is still actually in the bank.

Austin_Allegro

I agree that CC debt is going to be the next big problem.

Could we see a sort of 'credit run' on the CC banks, as people go for a last mad splurge on cards before they are withdrawn, in the hope that if the bank goes bust they won't have to repay?

sabretoothtigger

No because they'll have to pay regardless, debt doesnt disappear unless there is a Marxist revolution.
If anything I heard the opposite happening with credit card debt being forcibly secured against housing assets, etc

Generali

Austin_Allegro wrote: »

I agree that CC debt is going to be the next big problem.

Could we see a sort of 'credit run' on the CC banks, as people go for a last mad splurge on cards before they are withdrawn, in the hope that if the bank goes bust they won't have to repay?

For a bank, debt is an asset. If the bank goes bust then that asset is sold on to the highest bidder.

If anyone thinks they can spend until the bank goes bust and then be let off the debt they're mistaken.

Unless of course the Government buys the bank and decides that it's unpopular with the electorate to have to pay back debt that the electorate gas taken out and that they'd much rather see it repaid by their children instead.

fc123

Credit card companies have acted crazily over the past few years.
We never really had any cards for years (we used to have one I think that we hardly used, many years ago with a small limit).

I can't remember when we started acquiring CC ....I don't want to sound like a lame thicko....but I think I was sent an aplic for MBNA @ 0% in 2001 and decided that it would be a good idea to use it for stock....so getting an extra 30 days or so credit. I remember the limit kept increasing without me asking.

At some point, we acquired an access card each....might have been Lloyds bank (where our accounts were then) but I hardly used those then...or paid off in full. They had 15k each.

And then came a financial/ business/ life emergency, they got used and the debt just never really went down.

At one point, we had 70k available on CC.....and could have got more if we had wanted. We never did any secured loans etc but I reckon we could have maxed up to 220k if we had chosen to.

Son went off to Lloyds (unbeknwon to us) age 18, no job, to 'discuss' his gap year with the nice lady.
Walked out with a £1500 mastercard as the nice lady thought it would be fun to tramp around S America for a few months as well.

When he returned, full of adventure stories but with the debt to repay....he worked all summer at Amex....in CC debt collection.....put him off for life.
Plus in 3 months, he worked all hours for essentials and Mastercard....he learnt that had he done the work FIRST, then done the trip, it would have been a lot easier.

Just anecdotally, because we have been succesfully until Jan 08, paying down masses of debt (we nearly finished too...then the slump hit) since 2005, I forgot a lot of people hadn't had much debt at all as their businesses were doing fine.
Now, they are acquiring debt 'until the downturn ends' or 'until things get back to normal'.

fc123

sabretoothtigger wrote: »

No because they'll have to pay regardless, debt doesnt disappear unless there is a Marxist revolution.
If anything I heard the opposite happening with credit card debt being forcibly secured against housing assets, etc

Well, nothing is impossible. Who'd have thought the banks would be in such a visible mess right now?...OK, perhaps Gen and others BUT savings being lost etc. Lehmans actually going bust in public.

So, a Marxist revolution, though seeming improbable, is still one of those random events that could occur.
Are they the ones that wear camo and berets and hang off Nissan Pick ups....or am I getting mixed up with African revolutionaries?

BTW, I haven't enough historical knowledge to understand exactly what a Marxist revolution might be like....so I am not wanting one.

sabretoothtigger

Im not sure even that black swan guy is factoring in a Marxist resurgence even in russia