Oh My God, Amex Just Killed Me

climbgirl

Robflh wrote: »

Do not dismiss your credit card so quickly. Using the example in post 26 and post 40 paragraph 5 (My first LBM), buy everything you can with your credit card, food, petrol, car insurance and so on. Then use the cash you would have paid for those items to pay at least the minimum payment each month. Remember, the outstanding balance will increase during this time and so will the minimum amount you have to pay.

Once you are back in full time employment, you can again start to reduce your debt and eventually become debt free. This way you will not have ruined your credit rating and yes it is scary living off the credit cards but it will give you a temporary buffer, which will cover expenses that will occur from now and until you are back at work.

Wow, that's terrible advice! Paying just minimum payments is exactly what this site advises NOT to do, read Martin's article on this if you want more detail on why it's a bad thing to do. Using your credit cards as income, even for a short period of time is a dangerous thing to do. There are so many other options to take before you go down this road.

nicola1982_2

Yes sorry Rob I know you mean well but I think we see the situations very differently. I have worked for two large credit card companies (one particularly well know for unethical lending and high APRs for 'what's in your wallet') and both companies will take into consideration difficult circumstances. I also worked for a large credit reference company and there are so many things to be done that deal with blips in credit reference files. I intend to put a statement of affairs on my file stating the period I was on maternity which companies take into account when making lending decisions. I made the mistake of relying on credit cards whilst at uni which is what got me into so much debt in the first place - I refuse to let that happen again.

With regards to Amex, get angry get even - report their unethical credit limit increase to the financial ombudsman, even though it won't bring that credit back it may make you feel better. Also do you have any unclaimed bank charges? My OH recently made £3k claiming back from HSBC!

Robflh

Hi blackangeluk Hi climbgirl
I have said several times before that I am dyslexic and because of that, there is a bad connection between my head and my hands. What I think I have written may not come across as how I think it will. However, that is no excuse for people to miss quoting me.

I wrote. Then use the cash you would have paid for those items to pay at LEAST the minimum payment each month. I thought that was an easy statement to understand. However, perhaps it was just my understanding of it that was wrong. So let me try it this way.

Then use the cash you would have paid for those items to pay as much off the cards each month as you can, as long as that is at least the minimum payment each month, you will not get in to trouble with the credit card companies.

Oh yes, my suggestion does go against everything this section of the forum stands for but you never, never, never, never, never, ever go to your creditors unless you have to. It takes seconds to destroy a credit rating but it takes years for it to recover. My suggestion would do exactly as I have said. It would give nicola1982 a buffer until she is back in full time employment.

If for some reason, she is not able to go back to full time employment and then finds she cannot make at least the minimum payment that is the time to go to her creditors. In that case, she will still have gone to them, just later then sooner but if my buffer idea works nicola1982 will be back on the road to being debt free and she will not have had to go cup in hand to her creditors.

The majority of people on this board are in debt due to spending on credit cards

There are multiple areas on this forum. One of them is for people that have debt on credit cards and would like help in managing their cards or general information about them or who want to get rid of them.

This one is for Debt Free Wannabes and to me that is for people that have debts that they would like to get rid of. That means managing are debts and getting rid of them before we run into trouble. Is that not what are LBM told us do.

Do not get me wrong, I have every sympathy with those that through no fault of there own found themselves filling for Bankruptcy or having to go for an IVA but the fact of the matter is that most people that use a credit card are guilty of living beyond their means. That is exactly what a credit card allows us to do.

On this section of the forum, we have realised that we are doing just that and are trying to get debt free, so that we are once again living within are means or have I got that wrong as well.

Hi yellowmonkey
I think I have just answered as few of the point you have raised.

Why come onto a forum with people with debt problems maybe caused by credit cards when you look down on us as causing your problem.

I have not looked down on anyone, I have simple made a statement of fact. Saying that a certain crime is mostly committed by black youths is not a racist comment as long as you are making a statement of fact and not just a generalisation based on prejudice.

The fact of the matter is that credit card companies have seen a sharp rise in the amount of debt that they have to write off each year and because of that, they are reducing credit limits for all their personal accounts, regardless of how well the customer has mangaged there credit cards. In a way, that is a generalisation based on prejudice, it should be done on a case-by-case bases.

Hi nicola1982
You have posted while I was constructing this post. Give me a little while and I will do a post specifically for you.

climbgirl

No, there's no confusion, I understood perfectly what you're proposing - I still think it's a dangerous, rubbish idea! Using credit cards as income, even if only for a short period of time is a pretty dangerous prospect.

We don't know the full details of nicola1982's financial situation (and neither do you) - and until we do, it's impossible to suggest options for her. But I can't think of a single instance on this board where it's been suggested that a person struggling with debt use their credit cards as income. And frankly, I think it's dangerous of you to give out that advice without knowing the full details of her monthly incomings and outgoings. Fortunately, she seems to know better than to take that advice, judging from her post.

nicola1982, I'd suggest you start your own thread if you're looking for advice on how to get through the maternity period with a reduced income.

climbgirl

Robflh wrote: »

but the fact of the matter is that most people that use a credit card are guilty of living beyond their means.

That's a wild assumption which has absolutely no basis in fact. You're making all kinds of assumptions as to how the people on this board got themselves into trouble and for a lot, it's completely untrue.

You need to be more careful about the advice you're giving, it's downright dangerous. And frankly, I wouldn't put much store in advice given by someone who seems to ignore the rather good solutions offered by others to his/her own financial predicament.

yellowmonkey

climbgirl. :T :T :T :T :T :T :T :T :T :T :T :T :T :T :T

ym

blackangeluk

Hi, I appreciate that it takes you a long time to post and admire how well you do.

The fact remains as you repeated which is that you believe it is ok to use credit cards to spend on when funds are low in the hope that the debt can be repaid when funds are back to normal. This is exactly how people get into debt, spending on a credit card hoping to be able to pay it back later, only that amount increases with interest and somehow the thing becomes insurmountable.

I disagree with your comment "Oh yes, my suggestion does go against everything this section of the forum stands for but you never, never, never, never, never, ever go to your creditors unless you have to. It takes seconds to destroy a credit rating but it takes years for it to recover. My suggestion would do exactly as I have said. It would give nicola1982 a buffer until she is back in full time employment."

If for some reason, she is not able to go back to full time employment and then finds she cannot make at least the minimum payment that is the time to go to her creditors. In that case, she will still have gone to them, just later then sooner but if my buffer idea works nicola1982 will be back on the road to being debt free and she will not have had to go cup in hand to her creditors."


So it is better for her to increase her debt and then deal with it, rather than very sensibly dealing with it now??


"On this section of the forum, we have realised that we are doing just that and are trying to get debt free, so that we are once again living within are means or have I got that wrong as well."

No you are right, we are all trying to get debt free and I think to the majority of people on here that means not spending on credit cards and therefore not increasing our debt. I therefore find your advice to someone to spend on their credit cards and not contact them to advise them of the difficulties totally gobsmacking.

I am not wishing to enter a debate on this matter, those are my opinions, I think we should agree to disagree.

meme_3

Robflh wrote: »

The fact of the matter is that credit card companies have seen a sharp rise in the amount of debt that they have to write off each year and because of that, they are reducing credit limits for all their personal accounts, regardless of how well the customer has mangaged there credit cards. In a way, that is a generalisation based on prejudice, it should be done on a case-by-case bases.

I have read this thread with some interest.
It seems to me that Amex probably did look at this as an individual case - you cannot blame others for your predicament.
They have maybe realised that you are using credit cards as an additional income. This can never be a good idea - I know!
Just because you make minimum payments doesn't mean you can afford them - in fact it is a clear indication that you can't.

I personally think you should sell the house now - clearing your debts is number one priority. You will probably feel so much better without the debt. It doesn't matter if there's less money coming in, because there'll be a lot less going out.

Whatever you decide, I hope everything works out well for you, but please don't advise others to spend more on their cards as well.

By the way, my credit rating improved very quickly after just some of the debts were cleared.... This is because I was facing up to the problems and reducing them.

Robflh

Hi nicola1982
By now, you will have had time to read the post I have just made. As you have been in the credit card industry, you know from the other side of the fence just how bad they are.

My Capital One card started off with a low APR and 0% on balance transfers and purchases for nine months, which is why I applied for it. It now has an APR rate of around 19% but they are still offering new customer a very low interest rate and 0% percent for a period of time.

That is of course, as my old mum would say, a sprat to catch a mackerel. Once someone has the card, they are unlikely to send the card back when the APR starts to creep up. Fortunately for me, plenty of CC companies will give me a low APR rate, if I transfer a balance to their card. Normally two rates, one very low for a number of months and one not so low for the life of the balance but still a lot lower then 19%

I would only use one credit card to make my purchases with and after the 0% offer expired, I would transfer that balance to one of my other credit cards. Each time the outstanding debt on that card grow I would again transfer a balance to one of my other cards

This kept most of the outstanding debt at a low APR and as I was paying far more then the minimum each month, the balance on the cards I was not using would drop quite quickly. That would free up credit on those cards, so I could again transfer balances to them. Unfortunately, there are only a few companies that will let an unemployed person have a credit card and it first took me years to repair my credit rating. As the debt has risen, that number has dropped to very few if any. That is another reason why I have decided to sell my house.

Anyhow, when I first lost that job, I found my self in exactly the same situation as you are going to be in. I did not have enough money to pay for everything but like you, I did not bury my head in the sand. Within two days of loosing that job, I was at my bank asking them to redo my loan over a longer period so that I would only be paying £50 per month instead of £150. The only thing they offered me was a reduction for six months and then I would go back to paying the £150 a month and I would have to pay a lump sum of £600. As I had my doubts about having a job in six months time, that would be no good to me.

I had a small HP agreement with some company for an electrical appliance. It could have been for a fridge/freeze. I contacted them and explained the problem but they were not interested in helping me in any way shape or form. I had no way to pay the mortgage and it takes several months to get any mortgage relief payments and then I only received 50% of it for another few months. Therefore, I was getting into arrears with the mortgage. I did not know what to do next. At this point, I would have lost the house in no time at all. No wonder I had a breakdown.

I still do not know how I worked it out but I am glad I did. As I have said before, I paid for everything I could with the credit card and used the cash I did have to pay for what ever I could not pay with the credit card. That gave me the money to pay for the loan I had, the endowment part of my mortgage and pay more then the minimum payments.

Eventually, I received the full amount of mortgage relief and my loan and mortgage payment protection insurances finally paid out. I was then able to clear the arrears on my mortgage and my loan. However, for the first three years I effectively used the available credit on my credit cards to bail me out and to keep my home. So to speak, I was living on credit and in a way, I have been for over twelve years. So, I should know what I am talking about.

If I had not had a nervous breakdown and the right job had come along, I would have been able to clear the debt on my credit cards in just a few years but that was not to be the case. The ironic thing about using the cards to keep my home is that my home has gone up in value way faster then the debt on my cards has increased. If all goes well I am now in a position to sell my home and buy another one to do up and repeat the process as many times a I can, so that I have a nest egg for my retirement. It might not happen that way but at least I am willing to give it a go. If that is I can get round the obstacle, Amex put in my way.

Anyhow, I have always had the house to fall back on if it all went horribly wrong and I do not know the full extent of your circumstances. However, as long as you will be able to make at least the minimum payments during the time you are away from employment and you will defiantly have a job to go back to, it is an option worth considering. If it also means you do not have to go cap in hand to you creditors and I have been there and done that, it is one that is well worth considering.

I am not saying that you have to do it nor am I saying that you should not do it but it is an option and one that should be considered very carefully. At the end of the day, only you can decide if it is a viable option for you.

Whatever you decide to do, I hope you will soon find yourself to be a happy Mum and debt free.

PS. Do not forget to start you own thread. If people can help you to shave enough off your current budget, you will not need to use a credit card as a buffer.

owensmum75

I've read through this post with interest. I got into trouble with debt a few years ago and took out a consolidation loan to pay everyone off. Unfortunately my partner left me soon after and I had to sell the house to pay off the loan. After that I was debt free and had a bit of spare cash. The point is I dealt with my debts, did what I had to do to pay them off and accepted responsibility for my problems. It does seem like you want your creditors to take the blame for a situation you have got yourself into. I think the way for you to go is to sell your house. It would be better to get a reasonable price for it now than have it repossessed and lose even more money on it.