UK Banks and Building Societies write off £20 million pounds a day

ceridwen

neverdespairgirl wrote: »

It's also scary because so many people don't borrow at all. For example, OH and I have no debts*, neither do my parents, sisters, brother, or OH's brother. (Apart from my parents' mortgages, that is).

So someone's borrowing a lot more to make the average up to £8k for those of us who don't borrow at all.

* OH and I both spend mostly on credit cards, for cashback etc, but the bill is paid off in full monthly.

..and just what are they borrowing all this money FOR? Why do they want to borrow so much?

I cant help thinking the stigma/level of penalties for bankruptcy should have stayed the same. Personally - I run a "dual system" in my mind - such that if I hear of anyone going bankrupt I ask questions as to "how it happened?" and three times when I've seen a nearby person having gone bankrupt they've fallen into "stigma" category in my book - because I knew enough about their situation to know they were trying to wriggle out of their responsibilities.

(I do appreciate that some people have ended up bankrupt due to other peoples fault - rather than their own - and do intend to repay the money they owe if/when they get the chance to do so even if they arent legally obliged to do so. Hence why I ask for facts on each nearby bankruptcy - to see which category the person comes into...).

Really2

neverdespairgirl wrote: »

* OH and I both spend mostly on credit cards, for cashback etc, but the bill is paid off in full monthly.

But that still would leave a continuous balance on the debt figures. If you spend £2K on cards each month, no matter if you pay it off at the end of each month you are continually in debt by £2K on the basis of these figures.

ILW

neverdespairgirl wrote: »

I don't know - not by me, it's not, anyway (-:

Until it is paid of it is technically debt.

FTBFun

Really2 wrote: »

But that still would leave a continuous balance on the debt figures. If you spend £2K on cards each month, no matter if you pay it off at the end of each month you are continually in debt by £2K on the basis of these figures.

That seems a little odd - I also use my credit cards a lot of the time for cashback, reward points etc but always pay them off. I'm surprised that still counts as personal debt given I've never paid any interest.

Really2

FTBFun wrote: »

That seems a little odd - I also use my credit cards a lot of the time for cashback, reward points etc but always pay them off. I'm surprised that still counts as personal debt given I've never paid any interest.

Anything on credit is debt, regardless of interest payments. I too do the same but mainly for online shopping (sounds a bit wrong).

The thing is people could do that one day lose their job have no spare money, after a few months default on card.

No mater how responsibly you manage credit to mean you get no cost, it is still debt.
Paying for anything using any credit facility is debt, it is money you agree to pay back.

lemonjelly

debt noun

/det/ n [C or U]

something, especially money, which is owed to someone else, or the state of owing something He managed to pay off his debts in two years.
The firm ran up huge debts.
They are in debt to (= owe money to) the bank.
He ran/got into debt (= borrowed money) after he lost his job.
The company is deep in debt (= owes a lot of money).

As per Cambridge dictionary.

JustKeepSwimming_2

Really2 wrote: »

Anything on credit is debt, regardless of interest payments. I too do the same but mainly for online shopping (sounds a bit wrong).

The thing is people could do that one day lose their job have no spare money, after a few months default on card.

No mater how responsibly you manage credit to mean you get no cost, it is still debt.
Paying for anything using any credit facility is debt, it is money you agree to pay back.

I do the same & always pay off my CC in full each month & haven't paid any interest charges for over 10 years. Like NDG I don't consider it to be "debt" but I can see now how it can be classed as debt & used in these overall figures, which had never occured to me before.

Are there any figures for how many of those with CCs pay them off in full every month? I seem to be in a minority within my friends as I always pay it off in full (& I've only got 1 card). Many friends just accept that they'll pay extra, although most are using them for regular expenses (new car, railcards etc.) rather than living the high life.

Really2

JustKeepSwimming wrote: »

Are there any figures for how many of those with CCs pay them off in full every month?

I doubt it, the calculation is (I believe)
Total debt + New Debt + Interest - Debt repayments = New month.

I think it is mainly done to illustrate how debt goes up, it is interesting to here how peoples attitude to debt have changed and that debt on cards that has not hit interest penalties is not debt. (not a dig it is genuinely interesting)
As I say I do the same, but I do class it as a debt, anyone who spends every month on a card is continually in debt in reality. We just don't class it ourselves as we know we will pay it back.
Card companies don't make that distinction, you are in debt.

michaels

Hmm - what about the fact that I work for 30 days each month before getting paid? Applying the same arguement wouldn't it make sense to offset this 'asset' against debts that are paid off every month.

(As an aside, stoozers see credit card debt as an opportunity, currently I only have about 10k 'debt on cards costing me 0% and paying me 4% interest but a while back when interest rates were higher I often had 30k+ of 'debt'. I am also currently stoozing my entire mortgage at 250k but that is a secured debt so slightly different but I guess does make the point that may with 'debt' will also have savings, isas etc)

lemonjelly

Arguably a worrying trend Really2.

People's perception of debt has hanged drastically since I started working. People in my sector have also observed this sea change, hence my earlier posts.

Owing a significant amount of credit card debt, for example, is generally seen by a lot of people as normal. Where that debt can be serviced, it isn't a problem. But so many have little awareness of the implications of just making minimum payments and the like. Charges likewise.

The knock on effect of this has been (for many I see) is that budgeting skills have decreased. Credit has been seen as a back up. Once one card is maxed, use another. And so on.

It is why I am a supporter of financial literacy education, because too many people are unaware of the products & their implications for them.

One other thing, it isn't just lower income households affected by this. In my experience it is middle income households moreso. I think they have made borrowing decisions based on their income as it is at the time, not allowing for pay cuts, overtime cuts, or similar changes of circs. They have also been more likely to be targetted by credit providers, and also have aspirations to buy lots of additional consumer goods. Thing is, a lot of these have built up debts serviceable on a regular h-hold income of £40k+, but when there is a change of circs, it can be drastic in how it affects them, & their debt generally exceeds h-hold income annually.