Are banks lending irresponsibly?

techno_geek

I’m an 18 year old student, off to Uni in September – I have my Student account all ready with Natwest, and I have to wait until I get my results and my place confirmed to access my large interest-free overdraft and student credit card.

However, despite being unemployed and having very little money, I was alarmed to find out how much credit was available to me:

• Nationwide have given me a £1000 overdraft on my FlexAcount with the ability to step it up to £1500 if I wish
• NatWest will give me a £1200 interest-free overdraft on my Student Account, in addition to the £900 they have allowed me on my normal (and dormant) 'current plus' account!
• I have successfully applied for a £500-limit Student Credit Card from NatWest because I hold a Student A/C with them
• And HSBC gave me a £250-limit credit card (incredibly, without as much as a credit check) because I have a current account with them, too! However, they wouldn't give me an overdraft on my current account because I was unemployed!

This begs the question: if I can successfully gain £4350 of credit with little or no effort, how many less-savvy, less financially-responsible young people are able to do the same?

At this point I must point out that I applied for all this credit before getting my first job, and while I feel more financially-secure in the knowledge that this safety net is in place I have no intention of taking advantage of it!

I always pay off my credit card in full each month and watch my money like a hawk :A , but that’s not to say that other people my age would do the same and end up in difficulties. We’re all hearing how young people are graduating from university with so much debt, so why aren’t financial institutions tightening up their lending procedures and asking people why they need such a large overdraft, etc?

Is anyone else (young or old, student or not) in a similar situation? Have you been tempted to use your overdraft just because it was there?

MPH80

Is anyone else (young or old, student or not) in a similar situation? Have you been tempted to use your overdraft just because it was there?

Absolutely - it's partly how I got into 28k of debt by the time I was 22.

This begs the question: if I can successfully gain £4350 of credit with little or no effort, and precious little money anyway, how many less-savvy, less financially-responsible young people are able to do the same?

See - I'm not sure where you're going with this. I think you're saying that you know you can handle the credit - but it's irresponsible of the banks to lend to the non-savvy person.

Well ... I see two ways out of this if you are going to blame the banks:

1) The bank must set a financial awareness test before you can get any credit.

2) The bank shouldn't have let either of you have any credit at all.

Everyone is aware these days of avoiding high-fat, high-salt foods. Just because the supermarkets put them on the shelf - that's not irresponsible - the person doing the buying and eating has all the responsibility.

Banks are the same - just because they offer credit doesn't mean that you have to use it. They even go on to inform you through summary boxes how good/bad their credit offer is!

M.

Andy_L

If they didn't give you that much credit most students would be unable to afford to go to uni though

hobo28

MPH80 wrote:

Banks are the same - just because they offer credit doesn't mean that you have to use it.

Exactly. Once you reach 18, you are legally an adult and in a free society, you are able to make choices. SOme will be good, some will be bad but ultimately the difference between a child and an adult is that an adult needs to take responsibility for their own actions.

regularsaver1

The problem is - (discussed on another post about loans) - if someone wants credit they will get it somehow, whether its from their high street back, ir somewhere else paying 70% interest

simonts

I've always thought that aside from mortgages you certainly should not be able to borrow anywhere near as much as what you earn. Currently im still around £29k in debt (my fault completly)

I had a 10k cc limit with hsbc, 7k with egg, 6k with capital one, 6k with virgin, 2k overdraft limit and a 7k loan. I was only 22 and thats a crazy amount of credit that didnt even include store cards or catalogues.

These days while i still have a huge amount of debt i get by, Im always in credit and its all down to this site including the extras on the side from learnign about cashback and matched betting :d