Jacamo perpetual debt

kaMelo

https://forums.moneysavingexpert.com/discussion/comment/82077682#Comment_82077682

APR rates, whilst useful for comparison, can be seriously misleading if looked at in isolation.

https://www.youtube.com/watch?v=x8iSvTgJEmY

lordmountararat

I have never heard of Jacamo until this thread, but almost 75% APR is close to usury. How can it be legal?

Brie

https://forums.moneysavingexpert.com/discussion/comment/82078889#Comment_82078889

sadly it is legal.

VAP_Driver

https://forums.moneysavingexpert.com/discussion/comment/82078889#Comment_82078889

In general, people who manage their finances well and have a high level of disposable income, don’t usually buy clothes on credit, because they have sufficient funds to purchase outright and are very savvy when it comes to using credit, which is why they have a good credit profile.

From there, it’s a sliding scale. People who buy clothes and pay off over three instalments by using options like Klarna, are generally not as good at either earning or managing their money (or both). People who use credit cards and take more than three months, incurring interest, even less so.

Those who have accounts with catalogues, pay accounts with places like Jacamo, buy white goods and pay monthly over an extended period of time, or even use payday loans and the like, are usually doing so because they have no better alternatives due to their poor credit profile, other than to not buy the goods in the first place. This means they are at a much higher risk of defaulting.

Now these are all broad generalisations. But places like Jacamo have to charge high interest rates to cover the proportionally large amount of their customers who won’t pay what they owe. The debt-free wannabe board is full of people who have defaulted on their agreements, and that comes at a cost to those who do pay in higher interest rates to cover those losses. More defaulters for a given product or service provider = higher APRs.

This isn’t a judgement, just an explanation as to why Jacamo decides it has to charge 74% APR to lend from a business perspective, when compared to somewhere like Courtts bank.

Morglin

they’re sub prime lenders. The interest rates are high. But, they make it clear.

gnightly

Just a little update for anybody who's following this thread.

I paid them a grand and then another £60 a month later.

When my balance was at £373 they charged me £55 interest for the month on that amount. On a yearly rate that is 176.94%.

I've since paid them another £100, I'll let you know what the monthly interest on £273 is when it comes in.

MorningcoffeeIV

The interest wasn't just charged on £373.

Remember that interest is charged daily, not monthly, and your balance was far higher before you made the two further payments.

Brie

Sounds like you're making very positive progress!! Well done.

I'm guessing the month's interest might come in under £30. Either way you are taking nice big bites out of what's owed.

horsewithnoname

Given that you say that didn’t check your balance or account or the information that the company provides, what did you expect them to do to get your attention that you wouldn’t also have ignored, and how do expect the company to know that?

Ergates

https://forums.moneysavingexpert.com/discussion/comment/82118855#Comment_82118855

Catalogue credit accounts are covered by persistent debt regulations. The FIs operating them have a legal obligation to monitor their accounts and the payments being made.

If, over a rolling 18 month window, more than 50% of the payments go towards paying off interest and charges, then they must contact the customer to warn them that they are in persistent debt. This must be an actual physical letter (where possible), not just an email or a message on the account/app/whatever. A second notification must be sent if the situation continues to 27 months, and at 36 months the operator must contact the customer to discuss repayment options.

I don't know how long the OP was paying just the minimum - if it was for longer than 18 months and they didn't receive a letter then there may have been a breach of the regulations. Obviously letters can just be ignored (or go the an old address), but at the 36 month mark the operators can no longer just shrug and say "we tried" - they are required to pull out all the stops in an attempt to contact the customer, also the account should be suspended.

Given the OP contacted the company and they didn't immediately say "We've been trying to contact you for some time about your persistent debt" then either the OP wasn't in that situation long enough to trigger the actions, or the operator is not properly complying with their obligations.