One Credit Card Only

Sgt_Oddball

Wouldn't a better solution to be some form of financial exam (like a GCSE) - like a certificate of financial common sense? Nothing too difficult but something along the lines of understanding interest rates, costs of borrowing, mortgages, timescales - just general financial common sense.

Access to high risk financial products (which require responsibility on behalf of the borrower) like credit cards would require this certificate from the borrower. Obviously, you could still allow everyone to have basic bank accounts without this certificate.

It is one of the saddest things of our times that as soon as someone turns 18, credit is shoved down their throats and then they learn the hard way!

I can't believe we don't educate our children in school about finance.

Robert_Sterling_3

Sgt_Oddball wrote: »

I can't believe we don't educate our children in school about finance.

I do not wish to be controversial and call me an odd ball if you will but :-

I can believe that we don't educate our children in school about finance.

Rafter

Sgt_Oddball wrote: »

I can't believe we don't educate our children in school about finance.

It is now part of the national curriculum and it is a key part of the FSAs response to the current crisis.

Personally I think limits on credit cards should be <25% of your gross income combined. So if you are at your limit and want to do a transfer, you literally have to transfer the whole account across and can't use the old card.

This would stop people transfering debt then filling up the old card again.

Same should apply to loans, store cards, hp etc.

Minimum payment on a credit card should be at least 5% too so you have to pay the bill off within a couple of years. It is crazy that you can finance supermarket shopping over 17 years (if you only make minimum payment) at present.

R.

Richard019

Rafter wrote: »

Personally I think limits on credit cards should be <25% of your gross income combined. So if you are at your limit and want to do a transfer, you literally have to transfer the whole account across and can't use the old card.

I currently have over 75% of gross income available on credit cards on top of a mortgage that's now around 3 times my income (it was 4.5 times a couple of years ago when I got it) and have no problems managing it properly. I've never had credit card debt that has been costing me more than it's earnt me sitting in the bank. Why should I on an already low income have my income (stoozing) cut further because other people don't have will power or common sense, I've already lost enough of it through the falling interest rates.

Moggles_2

Everyone should have at least one back-up credit card, IMO, particularly if you travel away from home frequently.

Why should consumers in general be penialised because a foolish minority behave like kids in a sweet shop? Anyone who cannot resist spending money they don't have, would in all probability get into debt, whatever restrictions were introduced.

beer_tins

The reason you can't use gross income as the only deciding factor is because it takes no account of personal situation, For example:

1) A couple. Both on £25,000, living in Sheffield. No kids, no mortgage. Cheap rent. Savings.

2) Another couple. Only one income: £50,000, living in London. 3 kids, mortgage and little savings.

The second couple pay more income tax (only one personal allowance used, higher rate tax due) and have high outgoings. Their disposable income is far less than the 1st couples, yet the sole measure of gross income would allow them the same credit limit.

There only regulation that would work would be for the government to limit the total amount of potential credit to a certain multiple of reserves that the lender holds for this purpose. That would make lenders far more selective and we'd see credit limits more in line with what people could actually afford to repay.

Ironically, this kind of regulation isn't needed at the moment at all, as lenders are already very selective, due to the limited availability of credit to them. However, legislation should be put in place for when the credit crunch comes to an end, to stop banks lending as recklessly as they did when times were good.