Credit card interest rates

Joe_Bloggs

Sir_Woody Said

Now I have made arrangements via a secured loan to repay these and that is going through. But I don't see why MBNA should make such excess profits out of a reliable and regular payer.

You are probably cross subsidising MBNA for those who have defaulted on their credit card repayments or those who have fixed their rates perhaps even got them reduced via a debt management plan.

13% or whatever you remember was never the best money saving rate to borrow money at in the first place. I hope your can keep up the repayments on your secured loan.
J_B.

NickX

ILW wrote: »

Personally I think anyone who runs up 80k on credit cards (unless they are on a secure £250k plus salary) wants their head examined.

Theres a guy on the stoozing forum who has borrowed circa £300k on Credit Cards and used it to fund a very successful property renting empire.

Not all debt is bad debt

Sir_Woody

Yeah but CT hasn't doubled overnight. And most of it is wages and services.

I don't think bank employee wages have doubled in the last year have they or am I missing something?

I suspect that most people who are on this board and others like it have at some time in the past if not the present needed their heads examining. So welcome.

Sir_Woody

Debt is about confidence. There is nothing intrinsically wrong with it as long as you can manage it. Who has never had - or wanted - a mortage? Well only the "holier than thou"s, squatters or those that Daddy bought their house.

You believe you can pay it, you need somewhere to live anyway and you hope your job continues paying. Life changes so save us the preaching - see my earlier post.

talana

Sir_Woody wrote: »

Life changes so save us the preaching.....

Fine, no preaching.
You go right ahead and sue MBNA, then come back and tell us how it went. OK?

opinions4u

Sir_Woody wrote: »

Who has never had - or wanted - a mortage?

I wanted a house. I never wanted a mortgage. It was a means to an end.

Do you really believe people want £150k (example figure) of debt? No, they want the home that it buys them.

Did you want £80k in unsecured debt?

PAH1

It would be interesting to work out how much of the total debt you actually spent!

I've read that if you default and it's sold to a debt recovery service they typically only buy the debt for around 10% it's value! Hence why some accept full and final payments of as little as 30%, though tyically 50% or more.

Seems the credit rating isn't too badly affected by a f&f if the finance company agrees to put the correct entry on the credit file as part of the settlement agreement.

May be something worth looking into for a better outcome than trying to sue and all the costs associated with that, not to mention the uncertainty of the result.

ILW

Sir_Woody wrote: »

Debt is about confidence. There is nothing intrinsically wrong with it as long as you can manage it. Who has never had - or wanted - a mortage? Well only the "holier than thou"s, squatters or those that Daddy bought their house.

You believe you can pay it, you need somewhere to live anyway and you hope your job continues paying. Life changes so save us the preaching - see my earlier post.

I think it is probably also about the ability to service it.

PAH1

ILW wrote: »

I think it is probably also about the ability to service it.

Unless it's secured or properly insured how can anyone be confident any debt is really servicable? Sure maybe today, but anything can happen tomorrow.

Sir_Woody

It would be interesting to work out how much of the total debt you actually spent!

Not a lot. Ballooning interest means that most of what you pay is accumulated interest on interest. As my earlier calculation showed, £30k at 2.27%/month and £500 payments would have reduced to about £8k over 5 years.

The big problem with credit cards is that they don't let you manage that sort of debt reduction. If you could pay (say) min(balance,max(balance*.05,£500)) then the debt would reduce much more quickly once you got below a payment of 5% of the balance.

The only card I know that enables you to do this is John Lewis's store card - I don't know about their credit card. That's quite useful because you can set a budget when you have a steady income and want to buy a dining room suite or couple of armchairs.

Credit cards the way they are run are clearly a cause of a lot of the personal debt some of us have run up. And of course they charge the retailer up to 5% as well. They excuse that on internet fraud. Check out Worldpay's charges - I spent some time implementing a basket on a website. Most of the others are just as bad. So they win heads and tails.

And if you didn't use the card at all, wouldn't it be nice for them to reduce the interest after a period because any liability for fraud had finished. I just saw a pig fly past my window. It was looking for a settee I think.