MSE News: Labour pledge to cap credit card interest a 'positive step', says Martin

SnowTiger

antrobus wrote: »

How does it work with a rolling credit account? Someone takes out a credit card, spends thousands over a number of years...

As I mentioned here, you simply increase the minimum payment.

Canny credit card users already know they can reduce (or pay no) interest by making larger payments.

Of course, this doesn't mean some people won't always have a balance on their card(s). If society wants to end that it'll have to come up with other proposals.

Silvertabby

In very simplistic terms...

• 'Wealthy people' who can afford to pay off their CCs each month get free CCs, Cashback, loyalty points etc and 0% deals.

• 'Poor people' who can't afford to pay off their CCs each month, pay high rates of interest in order to fund the freebies for the 'rich people'. Posted by edddy

It's nothing to do with being rich or poor - it's just good (or bad) financial management. We're certainly not rich, but we always clear our cc bills each month because we live within our means.

Strange that Martin Lewis appears to be endorsing this proposal - his advice in the past has been to take advantage of cc benefits (cash back, extra insurance) but to ALWAYS pay off the bill in full each month.

chattychappy

Silvertabby wrote: »

Strange that Martin Lewis appears to be endorsing this proposal

I can even see it now - advice to borrowers not to pay back CCs in certain circumstances. A "balance transfer" misselling scandal because they restart the "interest clock". CCs will be told that before offering a BT they will have to advise cardholders that they might be better off leaving the debt where it is so it goes to 0%. Complaints that CCs are acting "unfairly" if they apply payments to oldest debts first when cardholders might be better off if oldest debts are paid last (because they are the closest going to 0% interest).

redux

One-Eye wrote: »

I wonder if Labour will also come up with proposals to tackle that even bigger problem of persistent debt - government borrowing. If anybody sees those pigs flying around Brighton, please take photos.

I found a website the other day, by a tax expert accountant, without political affiliation, who pointed out that Conservative governments have borrowed more per year than Labour in the last 70 years, or since 1979, and that Labour have paid back more government debt.

This applies whether or not you adjust for inflation.

Edit: yes folks, apologies, my post is off-topic. So is the one I'm replying to.

Enterprise_1701C

Labour can promise what they like, but it would be terrible if they got in.

What they REALLY want is for everyone to be dependant on the government so that people would continue to vote for Labour.

They they would have more than enough time to totally wreck the economy, make sure the unions were running everything and there was closed shops everywhere, and then they could start charging for the air that we breathe in order to pay everyone to lay around doing nothing.

After all, they detest companies making money, if they put a stop to that then companies will stop trading in this country and unemployment will shoot up horrifically.

takman

redux wrote: »

I found a website the other day, by a tax expert accountant, without political affiliation, who pointed out that Conservative governments have borrowed more per year than Labour in the last 70 years, or since 1979, and that Labour have paid back more government debt.

This applies whether or not you adjust for inflation.

Edit: yes folks, apologies, my post is off-topic. So is the one I'm replying to.

You could argue that during that period Labour are generally voted in during the "good" times. But when things get bad (such as the recession) the conservatives are voted in to "fix" the problems. So this would result in them having to borrow more money during these times when the economy is poor.

But i think these kinds of arguments carry little weight when Labour has a new leader with very different policy to ones in the past. Your much better off looking at their current "attitude" and pledges to work out the impact on borrowing and the economy.

redux

takman wrote: »

You could argue that during that period Labour are generally voted in during the "good" times. But when things get bad (such as the recession) the conservatives are voted in to "fix" the problems. So this would result in them having to borrow more money during these times when the economy is poor.

But i think these kinds of arguments carry little weight when Labour has a new leader with very different policy to ones in the past. Your much better off looking at their current "attitude" and pledges to work out the impact on borrowing and the economy.

Someone might argue that, but it wouldn't necessarily be true.

Three of the last four recessions happened under Conservative governments, two of those under Thatcher.

The last time that interest rates (which might be a bit nearer to this thread subject) were close to 15% was in 1989 (above 10% from mid 1988 to autumn 1991).

If interest base rates were 9 to 15%, then it wouldnt be surprising that some credit card rates might be 25 to 40%, but perhaps it's valid to have discussions allied to questions like what are they doing up there now.

sillygoose

I do think this policy is part of the 'nanny state' mentality that we need the state to protect us from even ourselves.

I agree the state has a duty to protect us from being abused or scammed by companies for example.

But Labour seem to struggle with free will in that taking out the credit in the first place is a free choice so they target the loan provider instead.

I know there is the old argument that poor people have to take credit to get by so effectively have no choice. Perhaps sometimes that is the case but it doesn't really wash with my own experience of poorer members of our family.

Perhaps if instead Labour tackled the problem at source with education, perhaps instead of virtue signalling gender issue sessions our kids have useful sessions to understand why for example Apple has hundreds of billions by having a 60%+ profit margin on its products and understanding value and financial wisdom.

zagfles

redux wrote: »

Someone might argue that, but it wouldn't necessarily be true.

Three of the last four recessions happened under Conservative governments, two of those under Thatcher.

Labour had by far the worst one though - after having told everyone they'd abolished boom and bust :rotfl:

The last time that interest rates (which might be a bit nearer to this thread subject) were close to 15% was in 1989 (above 10% from mid 1988 to autumn 1991).

Trying to stay in the ERM, and eventually failing. At a time when we were seriously considering joining the Euro! How things change...

If interest base rates were 9 to 15%, then it wouldnt be surprising that some credit card rates might be 25 to 40%, but perhaps it's valid to have discussions allied to questions like what are they doing up there now.

Main issue is risk. Look at the APRs on payday loans. Makes 40% look tiny.

Enterprise_1701C

sillygoose wrote: »

I do think this policy is part of the 'nanny state' mentality that we need the state to protect us from even ourselves.

I agree the state has a duty to protect us from being abused or scammed by companies for example.

But Labour seem to struggle with free will in that taking out the credit in the first place is a free choice so they target the loan provider instead.

I know there is the old argument that poor people have to take credit to get by so effectively have no choice. Perhaps sometimes that is the case but it doesn't really wash with my own experience of poorer members of our family.

Perhaps if instead Labour tackled the problem at source with education, perhaps instead of virtue signalling gender issue sessions our kids have useful sessions to understand why for example Apple has hundreds of billions by having a 60%+ profit margin on its products and understanding value and financial wisdom.

They don't want people educated. If they were they would realise that labour promise the stars but can't even get close to delivering the crust of the earth let alone the moon.

They want everyone taken down to the same level, education tends to increase chances of a decent job and then people realise labour are for the few rather than the many, and that it really is not a good idea to have the unions running the country.

They would rather simply control everything and everyone centrally, that is why corbyn admires Venezuela etc and is mates with putin.