on what grounds can credit card companies withdraw credit and demand immediate repay-

londonTiger

-ment

I remember watching a consumer tv show on property and the bubble. A segement was featured on a guy who bought a pub using credit cards. 0% interest CCs to be more exact.

He got into trouble, he ws paying off the minimum amount and thought he could get his business running and then pay off the balance entirely. Then the credit card companies got wind of this and decided to recall the line of credit and started ringing for instant payment and passing on the debt to debt collection agencies.

I need a small loan to start my own company. I'm a freelancer and do fairly well in my profession. I'm planning on getting office space, furshing the place and possibly hiring an extra hand to take care of the workload.

I don't have much money to be honest. Got about 6 grand saved up which I'll need for a rainy day. The office space rental, furnishing and buffer to pay staff probably will cost about 6 grand.

I've been freelancing from my home for a while - but to be honest it;'s really dragging me down because my home isn't the right environment for me to work a good solid working day. I think just having a nice office will double my productivity and move me away from the distraction at home.


Anyway.. I was wondering can I finance this using 0% purchase credit card. Or do I really need to take a loan. Bear in mind a loan will be 15% interest where as a 0% int credit card will cost me nothing as long as I keep the minimum repayment up.

I'm just a bit concerned because if the credit card companies rain and and demand immediate payment - I'll be screwed.

Eonel

If you read the Terms and Conditions of your credit card you will see that they can demand repayment of the balance at anytime and for any reason. There will be clauses similar to..

(iii) Xxxx Bank may at any time, with or without notice, as to the circumstances in Xxxx Bank's absolute discretion require, terminate the Card Account and the Card.

(iv) On termination of the Card Account and notwithstanding any prior agreement between Xxxx Bank and the Card Member to the contrary: (A) the total of all the Charges then outstanding are immediately repayable.

chattychappy

Eonel wrote: »

If you read the Terms and Conditions of your credit card you will see that they can demand repayment of the balance at anytime and for any reason. There will be clauses similar to..

Well I've not noticed anything as onerous as that in my T+Cs. Not in my Natwest agreement that I just checked. (But I can believe some CCs have them.)

If you close the account, then typically you must pay of what's owing. If you break the agreement or go into an IVA/bankruptcy, then potentially the whole amount becomes due. Ditto for fraud situations or if you misrepresented your income when you applied.

Lop-sided onerous terms are likely to be unenforceable. Note that lawyers often draft terms suspecting they might be unenforceable.

OP: I have seen T+Cs prohibiting business use of personal cards. That could be a situation in which they could reasonably demand full repayment.

[Deleted User]

I agree with cc - breach of the agreement is typically the only time at which the full amount could become repayable. And in practice, even that is fairly rare (on the basis that those who cannot make their minimum repayments generally don't have the option to repay in full, in any case).

dalesrider

londonTiger wrote: »

-
I need a small loan to start my own company.

I'm just a bit concerned because if the credit card companies rain and and demand immediate payment - I'll be screwed.

If its a personal CC then if they find out its a loan for a business. Expect them to want repayment.....

Business loans cost for the very reason of higher risk.

Draw up a business paln and approach your bank.

gb12345

londonTiger wrote: »

I've been freelancing from my home for a while - but to be honest it;'s really dragging me down because my home isn't the right environment for me to work a good solid working day. I think just having a nice office will double my productivity and move me away from the distraction at home.

I work from home as a freelancer a lot of the time and the secret is to make it like you are in an office.

Are you currently working from the sofa or kitchen table? If so then yes I would agree it is not really the right environment for efficient working. Do you have a spare room or shed that you can set up as an office?

I have a large shed that the previous owner used for DIY (so it already has electricity in), so what I did was put some insulation in it to keep it warm in the winter (also have a small fan heater), bought a cheap desk and filing cabinet and work from there. Picks up broadband from my house's wireless network and I just use Skype and a mobile if I need to talk to somone.

If that really isn't an option then how about looking at somewhere like Regus where you can rent office space by the day and spend a few days in the office and the rest of the week at home.

nathand_2

gb12345 wrote: »

I work from home as a freelancer a lot of the time and the secret is to make it like you are in an office.

I agree. One of the biggest benefits of being a freelancer working from home is that you don't have to commute.

I setup an office in my spare bedroom and that works well for me. If this is a new company you're setting up why not wait until you're earning from it before getting office space. There's no point in tying yourself into a contract until you have to.

Eonel

chattychappy wrote: »

Well I've not noticed anything as onerous as that in my T+Cs. Not in my Natwest agreement that I just checked. (But I can believe some CCs have them.)

In practice, Credit Card accounts tend not to be closed unless there is a breach of the agreement.

However, I tried to answer the OPs question in the broadest sense - and I would maintain that a credit card account can be closed by either party for any reason.

The T&Cs I quoted were genuine. Another sample below from Nationwide - the wording is not as onerous, but the effect is the same :

14. Closing your account
[FONT=Verdana,Verdana][FONT=Verdana,Verdana](a) At any time during this agreement either you or we can close your account by telling the other. We will give you reasonable notice before we do so.
(b) If your account is closed you must return all the cards we have issued on your account, cut in two, and repay everything you owe us under this agreement.

http://www.nationwide.co.uk/NR/rdonlyres/537363B6-1FD8-4521-AE0E-CEBF458F663E/0/P4433_OCT07.PDF




[/FONT][/FONT]

thenudeone

Eonel wrote: »

If you read the Terms and Conditions of your credit card you will see that they can demand repayment of the balance at anytime and for any reason. There will be clauses similar to..

(iii) Xxxx Bank may at any time, with or without notice, as to the circumstances in Xxxx Bank's absolute discretion require, terminate the Card Account and the Card.

(iv) On termination of the Card Account and notwithstanding any prior agreement between Xxxx Bank and the Card Member to the contrary: (A) the total of all the Charges then outstanding are immediately repayable.

I don't think that's true. (Unfortunately I can't seem to download the Nationwide terms)

An overdraft is usually repayable on demand, but as long as you stick to the terms on a credit card they CANNOT demand instant repayment.

An overdraft is a bolt-on to a current account, which isn't a lending product, it's a money transmission / management product; whereas a credit card is specifically a credit product. Any attempt to demand instant repayment when the cardholder has kept to all the terms would almost certainly be a breach of this: http://www.legislation.gov.uk/uksi/1999/2083/contents/made because it would create a huge imbalance in the relative positions of the consumer versus the bank.

smj43

londonTiger wrote: »

I'm just a bit concerned because if the credit card companies demand immediate payment - I'll be screwed.

No you wouldn't

londonTiger wrote: »

Got about 6 grand saved up which I'll need for a rainy day. The office space rental, furnishing and buffer to pay staff probably will cost about 6 grand.

You have the money to pay it if worst came to worst, which is unlikely.

dalesrider

thenudeone wrote: »

Any attempt to demand instant repayment when the cardholder has kept to all the terms would almost certainly be a breach of this: http://www.legislation.gov.uk/uksi/1999/2083/contents/made because it would create a huge imbalance in the relative positions of the consumer versus the bank.

But what the OP proposes to use the CC for would be such a breech.
Ie. using a personal CC for business.
Or more to the point as a loan to set one up.

Clearly not the intended use of a personal credit card.