No point in having good Credit Rating - I'm going to deafault !!

jimbms

I have to admit banks can be a little at fault in tempting people, after reading this I decided on checking the cards for both of us which by the way we only use for online purchases and the ones we do use are set up to pay in full each month. It seems on checking that our limits have been increased several time to a stage I have now £19k available on cards and she who must be obeyed has £22k. Very tempting for some people and I for one object to it. We have this morning cancelled all cards bar our bank Mastercard as we don't need this amount of credit and have enough savings to cover anything we could need. In saying this, yes the banks should be prevented from doing this but at the end of the day it is up to each individual not to be stupid with the credit they have available.

woody01

Karma4All wrote: »

Must admit, I wouldn't want to be servicing that kind of debt, each to their own.

It's no different to being on minimum wage and having a £250 CC bill or mortgage each month.
I'm lucky with my salary It's all relative to earnings.
Paying over £1450 per month for my mortgage only takes about 30% of my salary.
I don't have other debts to speak of. A couple of grand here or there, but that's all.

izools

NoNoDrama wrote: »

Erm hate to point this out to you but it was HSBC who gave me the credit in full knowledge of my salary! Infact they upped it from 2k to 6k without asking, idiot.

Yes that's right - as you have so far not defaulted on anything they've lent you or shown irresponsible debt levels prior to their increasing your limit, they felt comfortable making a full 50% of your salary available to you.

Now that you owe 50% of your salary, and nearly 100% of your limits, no creditor will further you extra funds.

As regards to sub prime - they offer facilities to people who have suffered repayment troubles in the past. Not people that can't really afford to borrow any more. If you had say £1,000 of debt and an additional £1,000 available but the odd missed payment here and there you'd potentially be in with a better chance of acceptance.

As regards to the APR, you were given the opportunity to opt out of the increases - by asking HSBC to close the account. The account would have become a repayment account, at the lower APR, with the same repayment terms as it always had. You chose to accept the higher APR because you wanted to leave the account open.

A concious decision made by you that you now need to take responsibility for.

Stop applying
Get repaying
Ask HSBC to close your credit card and turn it into a repayment only account

After six months you'll be in a much stronger position to be accepted for a balance transfer but it may take up to a year before you are accepted depending on how many times you've recently applied, how much you can clear down each month, and how much you can resist the urge to apply / spend in the mean time.

Good luck, if you tackle the problem head on you'll get things sorted. If you try to pass off the responsibility and blame all and sundry without acknowledging what you can do to resolve the debt, you won't get anywhere.

You'll be fine, with the right mind set :beer:

Karma4All

Shortly after posting here I applied for a credit limit increase to £10K on the only credit card I have. I have used circa £5K of the £7K limit, am a higher rate tax payer, have never missed or been late on a payment for anything, have no other debts apart from my repayment mortgage of about £180 per month & usually have about £2K in the bank that provides the card. I don't care as the card is just a token slow stooze, but it perhaps it goes to show that attitudes are changing.

jimbms

I think what a lot are missing here is how the card companies rate you. If you keep to just below your limit all the time and make minimum or just above payments then they are reluctant to up your limit as you may be at risk of defaulting. If you on a regular basis use the card but often pay it off they will not up your limit as you are too sensible and a higher limit would be no gain for them. The prime user to get an increase are those that keep to 80% of their limit and make well above minimum payments every month, these are the ones who are seen to be able to afford to make payments on an increase, will use the increase, at least risk to default and who also will make the company most money for minimal risk.

woody01

jimbms wrote: »

I think what a lot are missing here is how the card companies rate you. If you keep to just below your limit all the time and make minimum or just above payments then they are reluctant to up your limit as you may be at risk of defaulting. If you on a regular basis use the card but often pay it off they will not up your limit as you are too sensible and a higher limit would be no gain for them. The prime user to get an increase are those that keep to 80% of their limit and make well above minimum payments every month, these are the ones who are seen to be able to afford to make payments on an increase, will use the increase, at least risk to default and who also will make the company most money for minimal risk.

It's Exactly...it's a balancing act....
As you know, the CC companies are a business. If you pay off your full balance each month they aren't making any money from you.
If however you hover between 60-85% of you balance each month (eg. using £3500-£4500 on a £5000 credit limit card), they will be more inclined to up the limit as you are making them money.

It's a VERY common misconception that CC companies look favourably at people that either pay off their balance each month or keep it very very low.

Although the OP falls into the first category i mentioned, he didn't get an increase/another card, because he simply doesn't have enough income to service any extra debt as his salary is very low, whilst having comparatively high debt. This is thing he is desperately struggling to understand.
My debt level on a CC is very similar to his, yet i earn over 4 times more per annum.

Clive_Woody

woody01 wrote: »

As you know, the CC companies are a business. If you pay off your full balance each month they aren't making any money from you..

Not true, every time you spend using your credit card, the CC company makes money from the transaction (% commission charged to the retailer). They make additional money from people who do not pay off in full very month and therefore incur interest charges, but either way they win.

A big spender (several £1000/month) will be a valued source of income to the CC company even if they pay off in full.

I use a cash back credit card for all my spending and pay off in full every month. At the end of the year the CC company very kindly send me a nice cheque, they don't do this out of the goodness of their heart. I make money they make money.