Credit Card Debt

Dan:_4

Treadmill wrote: »

Are there any fees for transferring a Balance to a 3.9% rate ? If not thats an ok deal. You're really going to struggle investing 20K at a rate above 3.9% without tying it up for a long time though, unless you like taking risks.

No, there is no fee which is the main reason im considering it.

Yes, this is likely to be a long term thing - I have taken scarier risks over the years!

tomterm8

kennyboy66 wrote: »

Amongst the pearls of wisdom posted here have been the following.

1) People are paying their mortgage on their credit card
2) There will be massive write offs by the banks for all the credit card debt that cannot be repaid.

If these are both true, then why do "we" owe less on our credit cards now than in April 2008, April 2007, April 2006 and even April 2005 (and almost certainly April 2004 although the stats don't go that far back) ?

http://www.creditaction.org.uk/june-2009.html

Um, the article says that credit card debt has risen

Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,850 per average UK adult at the end of April 2009.

As to your question, this recession is caused by people cutting back to repay their debts to a large extent. So far, household savings rate has gone from slighly negative to just under 5%, and so average debt figures as a proportion of income should really be falling quite rapidly. Expecially when you consider how low mortgage rates are for many borrowers.

Plus,average debt rates should fall due to the people you mention (i.e. people in such a bad position they are paying their mortgage with a credit card) going into insolvency at a very fast rate

331 people today will be declared insolvent or bankrupt. KPMG estimate this will increase to 411 people a day throughout 2009 or 1 person becoming bankrupt or entering into an Individual Voluntary Arrangement (IVA) every 3.5 minutes.

Really2

tomterm8 wrote: »

Um, the article says that credit card debt has risen

Unsecured debt, Credit cards were bundled in with that, so you can not conclude from the statement credit card debt as increased.

tomterm8

Really2 wrote: »

Unsecured debt, Credit cards were bundled in with that, so you can not conclude from the statement credit card debt as increased.

That's the only mention of credit cards in the article that kennyboy referenced, as far as I can find?

I certainly can't find anything in the link to suggest that credit card debt has fallen.

Really2

tomterm8 wrote: »

That's the only mention of credit cards in the article that kennyboy referenced, as far as I can find?

I certainly can't find anything in the link to suggest that credit card debt has fallen.

True, i presumed he had some other source.

GDB2222

Dave101t wrote: »

why so worried about these people. if they are stupid enough to let their debts run riot then let them!
no one is going to write off credit card debt, thats wishful thinking.
i owe 100 quid over 3 credit cards, but thats just day to day shopping.

For someone whose finances are dodgy, it makes perfect sense to bung everything on plastic, whilst keeping some cash and all that gear you've bought for a rainy day. Then go bankrupt, lose all the debts, and get a discharge in 12 months time.

kennyboy66_2

tomterm8 wrote: »

Um, the article says that credit card debt has risen

As to your question, this recession is caused by people cutting back to repay their debts to a large extent. So far, household savings rate has gone from slighly negative to just under 5%, and so average debt figures as a proportion of income should really be falling quite rapidly. Expecially when you consider how low mortgage rates are for many borrowers.

Plus,average debt rates should fall due to the people you mention (i.e. people in such a bad position they are paying their mortgage with a credit card) going into insolvency at a very fast rate

The credit action June reports on the April data. There is some seasonality in cc balances (eg it goes up at Xmas), which is why I used the same month for the last 5 years. If you go on to the site you can check for yourself.

[Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,850 per average UK adult at the end of April 2009].
The comparable figure for April 2008 is £10 lower I thinks.

This recession is certainly not caused by people cutting back to pay debts, although certainly that contributes.

kennyboy66_2

Really2 wrote: »

True, i presumed he had some other source.

Gents, if you click on this link you have access to reports for the last 5 years.

http://www.creditaction.org.uk/debt-statistics.html

Here is the June 2005 report

http://www.creditaction.org.uk/assets/PDF/statistics/2005/june-2005.pdf

Total credit card debt £55.03 bn at that time.

Another stat (includes mortgages, but will also include households with no debt).

Average houshold debt April 2005 £44k

Average household debt April 2009 £58k

I would not dispute that as a country we have too much government, personel and corporate debt, however on an individual level its not quite as bad as people make out.

mr.broderick

GDB2222 wrote: »

For someone whose finances are dodgy, it makes perfect sense to bung everything on plastic, whilst keeping some cash and all that gear you've bought for a rainy day. Then go bankrupt, lose all the debts, and get a discharge in 12 months time.

I didn't realise you could pay credit with credit.
Well if a credit card company lets you have 20,000 of unsecured credit and you decide not to pay it more fool them in my opinion.

tomterm8

There are at least three credit cards where you can do direct balance transfers to a bank account, and AFAIK all credit cards allow you to withdraw cash at extortionate APR's...

There's an entire board on here dedicated to stoozing.

edit: see http://forums.moneysavingexpert.com/forumdisplay.html?f=95