Credit Card Statistics

Martico

I've not read through that very long piece, but I wonder how they account for 0% BT cards in the stats. They could account for a chunk of those that aren't fully paid monthly

MattMattMattUK

molerat said:

The lifestylers could all clear their debts in 1-2 years if they got their spending under control, but generally only see debts as a cost in terms of the monthly payments, rather than a waste because of the £200-500+ that they pay in interest every month. It is a really odd way of thinking but in general it seems that they would rather enjoy the highest possible spending in the short term, even if that has huge negative consequences in the medium and long term. 

That is the way we are being conditioned now.  When was the last time the adverts for a car mentioned the actual price rather than £xxx per month ?

Lots of things seem to be marketed that way, it is not far off becoming debt on a subscription model. 

It seems to be a huge divide, those who care about total cost and those who will spend all the way up to their capacity to fund the repayments.

WillPS

Martico said:

I've not read through that very long piece, but I wonder how they account for 0% BT cards in the stats. They could account for a chunk of those that aren't fully paid monthly

My thoughts exactly. I have 2 rather large balances which I pay minimum + £1 on each month. Could pay them off anytime if I wanted to, but would rather have the 5.2-8% interest for myself.

emperormessia

MattMattMattUK said:

DullGreyGuy said:

CliveOfIndia said:

GeoffTF said:

 and a big majority of credit card users do not settle their bill each month.

Because they're either living beyond their means, or they're labouring under the misapprehension that paying interest makes them more attractive to lenders.

A little bit harsh, some will be those that have had one off incidents (lost job, boiler died, close family member died) that have pushed them into debt and they've not managed to recover from it yet but aren't getting further into debt. It's not just those that are trying to live a champagne lifestyle on lemonade income. 

Whilst I agree that there are those that carry credit card debt in the short term due to misfortune, the vast majority of people I know where the conversation has come up fall into either those who pay in full every month, or those who carry credit card debt due to lifestyle choices. 

The lifestylers could all clear their debts in 1-2 years if they got their spending under control, but generally only see debts as a cost in terms of the monthly payments, rather than a waste because of the £200-500+ that they pay in interest every month. It is a really odd way of thinking but in general it seems that they would rather enjoy the highest possible spending in the short term, even if that has huge negative consequences in the medium and long term. 

My Dad is exactly as you described it extremely odd when I think about it because you can afford this 2.5k payments today and be done but he’d rather have the money in a saving while still paying interest,
i’m tempted to just pay it off but i think I should mind my business 

CliveOfIndia

emperormessia said:

MattMattMattUK said:

DullGreyGuy said:

CliveOfIndia said:

GeoffTF said:

 and a big majority of credit card users do not settle their bill each month.

Because they're either living beyond their means, or they're labouring under the misapprehension that paying interest makes them more attractive to lenders.

A little bit harsh, some will be those that have had one off incidents (lost job, boiler died, close family member died) that have pushed them into debt and they've not managed to recover from it yet but aren't getting further into debt. It's not just those that are trying to live a champagne lifestyle on lemonade income. 

Whilst I agree that there are those that carry credit card debt in the short term due to misfortune, the vast majority of people I know where the conversation has come up fall into either those who pay in full every month, or those who carry credit card debt due to lifestyle choices. 

The lifestylers could all clear their debts in 1-2 years if they got their spending under control, but generally only see debts as a cost in terms of the monthly payments, rather than a waste because of the £200-500+ that they pay in interest every month. It is a really odd way of thinking but in general it seems that they would rather enjoy the highest possible spending in the short term, even if that has huge negative consequences in the medium and long term. 

My Dad is exactly as you described it extremely odd when I think about it because you can afford this 2.5k payments today and be done but he’d rather have the money in a saving while still paying interest,
i’m tempted to just pay it off but i think I should mind my business 

It can be a tricky one to rationalise.  On the one hand it's eminently sensible to have a savings pot, not least so that you have the money available if the boiler goes kaput or whatever.  On the other hand it doesn't make sense to have money available and yet be paying large amounts of interest (far more than your savings are earning) on a credit card debt (assuming it's not on a 0% promotional rate).

Arguably it would be better to use the savings to clear the credit card, then rebuild your savings pot by paying the same amount back into each month as you were paying to the credit card.  The net result being that you'd end up with even more savings overall, as you're effectively paying yourself the interest you used to be paying to the credit card company.

In the interim, whilst your savings are depleted, you could use your credit card to pay for anything desperately urgent that might crop up - although there's a chance that if it's something like a boiler or a new roof, then the plumber/builder/whatever may not accept credit card payments. 

GeoffTF

CliveOfIndia said:

In the interim, whilst your savings are depleted, you could use your credit card to pay for anything desperately urgent that might crop up - although there's a chance that if it's something like a boiler or a new roof, then the plumber/builder/whatever may not accept credit card payments. 

It is possible to withdraw cash with most credit cards. There will be a fee for that, and also interest, but he is paying interest anyway. Risking a 3% fee every few years is better than paying out 30% every year. Of course, he will need to do the sums, but not everyone is up to that.

username

I'm of the opinion of that if I'm going to spend then at least I should get some sort of reward for it, whether it be cashback, airline points etc.

No point in just sticking it on the debit card and then getting a "thank you very much" from your bank.

I always pay off in full every month, so also have the benefit of upto 56 days interest free depending on the card.

grumbler

CliveOfIndia said:

emperormessia said:

MattMattMattUK said:

DullGreyGuy said:

CliveOfIndia said:

GeoffTF said:

 and a big majority of credit card users do not settle their bill each month.

Because they're either living beyond their means, or they're labouring under the misapprehension that paying interest makes them more attractive to lenders.

A little bit harsh, some will be those that have had one off incidents (lost job, boiler died, close family member died) that have pushed them into debt and they've not managed to recover from it yet but aren't getting further into debt. It's not just those that are trying to live a champagne lifestyle on lemonade income. 

Whilst I agree that there are those that carry credit card debt in the short term due to misfortune, the vast majority of people I know where the conversation has come up fall into either those who pay in full every month, or those who carry credit card debt due to lifestyle choices. 

The lifestylers could all clear their debts in 1-2 years if they got their spending under control, but generally only see debts as a cost in terms of the monthly payments, rather than a waste because of the £200-500+ that they pay in interest every month. It is a really odd way of thinking but in general it seems that they would rather enjoy the highest possible spending in the short term, even if that has huge negative consequences in the medium and long term. 

My Dad is exactly as you described it extremely odd when I think about it because you can afford this 2.5k payments today and be done but he’d rather have the money in a saving while still paying interest,
i’m tempted to just pay it off but i think I should mind my business 

...On the one hand it's eminently sensible to have a savings pot, not least so that you have the money available if the boiler goes kaput or whatever.

I don't see anything sensible here. Use savings to pay the CC balance off and to stop paying interest. Then, "if the boiler goes kaput or whatever" and you don't have cash available, use the CC to fix the problem. In the worst case scenario withdraw cash from the CC.

GeoffTF

I realise that not everyone qualifies, but my Barclaycard Rewards card does not appear to make a charge for cash withdrawals in Sterling (or any other currency):

https://www.barclaycard.co.uk/personal/credit-cards/barclaycard-rewards

The will be interest to pay, of course, if the balance is negative. "Ways to Pay" on my statement does not show cash as an option, but this link suggests that it may be possible to settle the bill with cash at a Barclays branch:

https://www.barclaycard.co.uk/personal/customer/pay-your-bill

zagfles

GeoffTF said:

Here is an interesting article:

https://www.money.co.uk/credit-cards/credit-card-statistics

I make my day to day payments by credit card, and pay it off in full every month by Direct Debit. Interest free credit and a single bill each month. That is not what most people do. A big majority of card users pay by debit card, and a big majority of credit card users do not settle their bill each month. Why is that?

Well obviously those like me who have a promotional 0% balance aren't going to pay in full every month. That would be daft when I could be earning around 6% interest.

Then there are those who might occasionally not pay in full, the "infrequent revolvers".

That leaves the a minority (42.6%) who regularly pay interest, the "revolvers/hardcore revolvers". 

So it seems the majority of credit card users use them sensibly.