Credit card debt

TCR4x4

TCR4x4

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Tom
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Was discussing with the wife about her credit card bill, as we are moving house on Monday and she was worried about the credit check the mortgage company do before they transfer they funds.
She has about £100 on there currently, which in my eyes is nothing and she always pays it off every week anyway.
I was looking up the average credit card debt for the uk and it seems anywhere between £7k-£13k is quite normal.
This astounds me as I’ve only ever had a maximum of about £2k on a credit card and that was after an emergency car repair. I’d paid it off in full within 2 weeks.

Do people really build up £7k + on credit cards? Is it considered normal and are we “abnormal” for not having huge sums on our cards?
 
I certainly wouldn't worry about £100. We got a mortgage offer a few months ago. When we applied (via a mortgage broker for self employed) we had around £1500 on a credit card and was told not to worry about that. We only really use a credit card for high value purchases for protection and it's usually paid up within a month or two.

I don't know if they did a credit check before releasing the funds a few days ago, but we'd just bought a new lounge suite for the new house on the credit card which pushed it up to £2500. We certainly didn't hear anything from the bank about it and it will be paid up at the end of the month anyway. As lounge suites take 8-10 weeks for delivery we obviously used the credit card just incase the company went bust before we took delivery.

I'm afraid it is becoming more normal to rack up huge debts these days. Everybody wants the latest gadget now.
Personally I can't stand debt and whilst I do use credit to spread the costs, I go out of my way to use interest free options and to pay up as sooner rather than later.

I've budgeted to pay off my new 23 year mortgage within 15 years.
 
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Yes. I have circa 15k total over multiple cards, constantly transferring between cards for better deals. I pay only a pittance in interest. It's shot up from about 6k in the space of a year thanks to a series of expensive car parts being needed, moving house etc and recently new glasses. It is now on it's way down again, though when it gets back to 0 there will be a new car looming...
 
Read about this last week, seems credit card companies keep raising the spending limit when people get near it.
So yes can easily believe there are some large debts out there, must be a worry.

Use ours for shopping, online purchases, rail tickets etc, but pay it off every month so probably not valued customers.
 
tijuana taxi said:
Use ours for shopping, online purchases, rail tickets etc, but pay it off every month so probably not valued customers.
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Exactly the same here, I really couldn't justify running up a massive bill, that I couldn' pay off at the end of the month.
But of course its easy to see how, some people get into serious problems .. \/
tijuana taxi said:
seems credit card companies keep raising the spending limit when people get near it.
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I wouldn’t worry about £100.

Someone at work has half a dozen credit cards on the go at any time. He recently told me that a few years ago, his minimum payment for his cards was more than his month’s pay!

He is starting to sort it out now.


Steve.
 
I had 21K on credit cards up until August last year when my Mum passed away and left me some money. It's easy to get in the credit trap. Want something get credit then buy it, want something else get something else buy it on credit. Credit card company ups limit so you get a bit more. Before you know it your hooked.

I'd bet loads of people do the same and then find they can't get out of debt.

Thankfully I was on a mission to pay mine off anyway, but not by the means I would have chosen. When Mum passed away I vowed the first thing I would do is get myself out of debt once and for all which I've done. Now if I want something I make myself wait and nine out of ten times I stop wanting it. The only thing I'd like at the moment is a 4k monitor for my PC, but I've resisted buying one as its a luxury not a need. I have the money but can't bring myself to spend it.
 
A credit card used sensibly is a plus on a credit report. It shows that you know how to manage money!
I have DDs for all my cards to pay off the full amount each month, I usually "owe" about £800 each month.
Up until a year ago my wife did not have any credit card accounts in her own name, she was an additional card holder on all of mine. Her credit rating was lowish so she applied for a card with me as an additional card holder to build up her credit record. Her limit was low at first but they keep offering to increase it as she pays it off in full each month.
 
I've not had a credit card in around 15yrs. Buying the new car last month was the first debt I have taken on since then and I shall be paying that off by the end of the month.
 
It appears from what I read you are 'abnormal' Tom, though from my point of view you appear eminently sensible.

I've had a credit card since about the mid 1970s and apart from a few months early on in my credit career I have always paid off the balance every month - I imagine I'm a credit card company's worst nightmare.

One of the comments above is interesting. My first card was an Access Card which I got about the same time as a mate I shared a flat with at the time. After I got my self sorted and made sure I cleared the balance every month Access kept upping my credit limit. My mate who paid more or less the minimum every month was more than a bit peeved that his limit was never increased.

Now, as noted above, the banks attitude is the opposite. If you get near your limit or just pay the minimum, then they increase your credit limit.

Part of me, actually a lot of me, says people should be more responsible for their own actions but part of me says banks should bear a lot of the responsibility.

Unfortunately we have moved from the idea that debt is bad to debt being regarded as an asset.

Dave
 
nilagin said:
I've not had a credit card in around 15yrs. Buying the new car last month was the first debt I have taken on since then and I shall be paying that off by the end of the month.
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Handy things especially for protection when making certain purchases, if used responsibly they are very useful things to have.
Debt is also ok if it can be serviced, but when I see some people's lifestyles they must be in hock up to their eyebrows.
After all mortgage is a debt, but no other way for most to buy a house, not so sure about all the remortgaging though for cars and holidays.

Personally happier with a relatively simple life and being debt free than having a new car and the latest greatest.
 
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I only use mine for protection really, or on the very odd occasion for an “I want it now”. But I always make sure that I have the funds to clear it before the month ends.

I know I could get into a lot of trouble by using it for everything, then you suddenly realise how much you’ve spent and can’t pay it off.
Can’t think of anything worse than owing a huge amount on credit cards, our new mortgage scares me and is enough debt to last a lifetime.
 
TCR4x4 said:
our new mortgage scares me and is enough debt to last a lifetime.
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Never a truer word, saw on the news today about people having mortgages over a forty year term.
If they had kept to a strict policy of 10% deposit, rigid multiplier of your earnings and max of 25 years the house prices would have stayed affordable
 
tijuana taxi said:
Handy things especially for protection when making certain purchases, if used responsibly they are very useful things to have.
Debt is also ok if it can be serviced, but when I see some people's lifestyles they must be in hock up to their eyebrows.
After all mortgage is a debt, but no other way for most to buy a house, not so sure about all the remortgaging though for cars and holidays.

Personally happier with a relatively simple life and being debt free than having a new car and the latest greatest.
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Other than cars and the house I don't really buy expensive things or anything really worth needing protection that buying with a credit card would bring.
As far as taking on a car loan, I wasn't going to as I was going to order a car and with anything from 3 to 6 months wait for the car to be built, my isa would have paid out and I wouldn't have needed the loan. But the chance of a better specced car came up in a dealers stock for less money so it was too good to turn down and suffer one months interest.
 
tijuana taxi said:
Never a truer word, saw on the news today about people having mortgages over a forty year term.
If they had kept to a strict policy of 10% deposit, rigid multiplier of your earnings and max of 25 years the house prices would have stayed affordable
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But it's people with savings buying up houses as a means of investment that is pushing up house prices.
 
Buy everything on ours, but pay it off in full each month. Just to get Tesco points, which we swap for day out vouchers. Saves a fortune through the summer hols :)
 
Thankfully I haven't had a credit card for a few years now.
It is all too easy to rack up spending on such when younger and with a young family.
I'm not talking holidays but the likes of days out, clothes etc nothing overly extravagant.
Add on a couple of luxury buys for yourself ( good optics, sound system e.g) and then suddenly you find you're paying a largish sum as the minimum payment each month.
My advice to any young person is just don't go near them.
 
tom24 said:
Thankfully I haven't had a credit card for a few years now.
It is all too easy to rack up spending on such when younger and with a young family.
I'm not talking holidays but the likes of days out, clothes etc nothing overly extravagant.
Add on a couple of luxury buys for yourself ( good optics, sound system e.g) and then suddenly you find you're paying a largish sum as the minimum payment each month.
My advice to any young person is just don't go near them.
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How about when you need one if a hotel wants it as deposit for a booking or you want to buy rail tickets from someone like DB.
Also safer than a debit card for online purchases such as when Jessops went bust, CC purchasers got their money back.
 
Buy everything I can on the card, pay it off at the end of the month. Accrue no interest, get purchase protection and get John Lewis vouchers. It's all good as far as I'm concerned.

There's no need to pay it off every week. They only send a bill once a month and you typically get 20-30 days after that before it accrues interest on purchases, so just pay it off in the week before the interest free period runs out, or set up a DD to do that for you..

Absolutely nothing wrong with them as long as you are sensible.
 
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tijuana taxi said:
How about when you need one if a hotel wants it as deposit for a booking or you want to buy rail tickets from someone like DB.
Also safer than a debit card for online purchases such as when Jessops went bust, CC purchasers got their money back.
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If you can manage them, yes.
I'm making the case for how easy it is to spiral into large debt before you know what's happened.
This is a big problem for a lot of folk and it's a thing that creeps up on them before they realise how all those wee things have added up.
I would think that those with large card debt didn't want to accrue such.

I'd just like to remind folk that they can be your worst enemy.
 
onomatopoeia said:
Buy everything I can on the card, pay it off at the end of the month. Accrue no interest, get purchase protection and get John Lewis vouchers. It's all good as far as I'm concerned.

There's no need to pay it off every week. They only send a bill once a month and you typically get 20-30 days after that before it accrues interest on purchases, so just pay it off in the week before the interest free period runs out, or set up a DD to do that for you..

Absolutely nothing wrong with them as long as you are sensible.
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Good old John Lewis partnership card, very handy especially when your only local supermarket is Waitrose
 
tom24 said:
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If you can manage them, yes.
I'm making the case for how easy it is to spiral into large debt before you know what's happened.
This is a big problem for a lot of folk and it's a thing that creeps up on them before they realise how all those wee things have added up.
I would think that those with large card debt didn't want to accrue such.

I'd just like to remind folk that they can be your worst enemy.
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Same could be said of many things, I liked a pint or two, but didn't become an alky, all about the individual.
Why advise young people to stay away from them, that won't teach them to be fiscally responsible, better advice would help
 
onomatopoeia said:
Buy everything I can on the card, pay it off at the end of the month. Accrue no interest, get purchase protection and get John Lewis vouchers. It's all good as far as I'm concerned.

There's no need to pay it off every week. They only send a bill once a month and you typically get 20-30 days after that before it accrues interest on purchases, so just pay it off in the week before the interest free period runs out, or set up a DD to do that for you..

Absolutely nothing wrong with them as long as you are sensible.
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That's me too. Spot on.

I have absolutely zero understanding of, and (I'm sorry to say) almost zero sympathy for, people who get into debt and claim that credit cards make it too easy. There are two completely separate issues to keep in mind: (1) how much you can afford to spend, and (2) what means of payment you will use. It's really not that hard to keep them separate.
 
StewartR said:
That's me too. Spot on.

I have absolutely zero understanding of, and (I'm sorry to say) almost zero sympathy for, people who get into debt and claim that credit cards make it too easy. There are two completely separate issues to keep in mind: (1) how much you can afford to spend, and (2) what means of payment you will use. It's really not that hard to keep them separate.
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Presumably need a CC to rent one of your lenses?
 
:wave:And here’s me worrying about my £15.36p credit card debt ,can’t even remember why I used it or for what must have been a reason though ,:wave:
 
The way I describe it to younger people (e.g. my younger brother, and cadets when I used to run a local group) is that it is a tool, and like any tool if you don’t take the time to understand it and using it up front you risk getting hurt.

I have seen many successful businesses started on personal credit card debt, and many people get themselves in trouble by buying every takeaway, night out, branded clothing and anything else they want on cards and making minimum payments.
 
TCR4x4 said:
I only use mine for protection really
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Same here, we only use it rarely & it's for purchases over £100. We never have used it for `credit` as such & only buy something when we have saved first & pay it off straight away.

Obviously younger folk can't usually do that, but I do think `credit` is too easily available these days (in general)

When we first got ours a few years ago the limit was only a couple of grand, but they kept increasing it until it was around £7.5K, at which point we rang & said to keep it at £5k. I can understand how easy it is for some folk to get into serious debt.


We actually have a separate CC with a £1k limit which is used solely for 'tinternet/amazon etc shopping.
 
At 33 i still consider myself “younger folk”, but I guess I’m a bit different. :D Bought my first house at 22, now just bought our second. Never been in debt apart from mortgage.
Don’t go out drinking, don’t smoke, don’t go on expensive holidays.
I do enjoy the finer things though, I own two land rovers, lots of watches and camera stuff, drums and other gadgets, but always save up for what I buy or sell something else to pay for it. Most of my school friends still live with their parents and have debt coming out of their ears.
 
I used to work for a credit card company and I can tell you there are 3 types of customer..

1) has a moderate balance, clearing it regularly so as to not to incure interest, is careful with their account to not run up more than they can afford..
2) has a massive balance often on multimple cards, plays the balance transfer game to keep the interest at bay and pays or literally the minimum
3) emergency holder, never uses the card or rarely uses it but likes to have it as a back up

I'd say 99% fall into those three camps, but you really need to take a close look at yourself if your type 2 as at some point credit starts to run out and it will come back to bite you

Type 2s will usually be the ones that buy everything on credit, they own little in reality and debt has become a lifestyle almost and I've seen it from my job where this has come crashing down spectacularly
 
What yourself is doing is smart and the kind of thing someone with a credit card should be doing. Paying it off at the earliest convenience.

Problem with credit cards is (I think), the money leaving the card belongs to the bank, so I reckon people have an almost carefree approach to paying it back. I could be misguided their.

Personally, my credit report is somewhat slightly negative as I failed to make some contractual phone repayments years ago. I've since taken an Argos Card recently and I intend to use it as a means to improve my credit rating. Needing stuff from the place also helps ! I've been wanting to buy a Nikon 105mm Micro Lens but it seems to pricey to buy outright. Buying it on credit and paying it over a period of time lessens the impact on the bank balance.
 
Type 1 here. I was told the financial industry views no credit history as equivalent to a bad history, so having a card and using it regularly, but lightly, and never missing or bouncing a payment will be a plus point if I ever need a loan or mortgage.
It only gets used for petrol a couple of times a month, so it's really easy to check for fraudulent transactions.

I have noticed though, that when I got it, there was a £2K limit. That became a £3K limit, and earlier this year it was now a £3K5 limit. I've never been asked if I wanted this, or been told it was being done, and I've never been anywhere near maxing it out. :thinking:
 
type 3 me for sure, just the odd internet purchase, usually headphones.
gets paid off straight away

had a capital one card for ever and its been used maybe 6 times in 10 years.

wife has a mastercard which she uses for our amazon account and for holidays and thats it.

I also don't get the massive debt thing but i guess it is just the best way of people spreading purchases now adays without individual loans for every item.
 
I'm fortunate in that I've never paid a penny interest on credit cards - have always cleared the balance every month.
 
The only reason i have a credit card is for car hire when i go abroad, that's the only time i use it.
 
I don't know if it's still true but it used to be better for your credit rating if once or twice a year you didn't clear the whole balance. You'd need to make at least the minimum payment to avoid a non-payment black mark, & then clear it completely the next month (a bit like taking 2 months to pay off Christmas)

The logic behind it was you're not a risk and will always pay it off, never miss a payment, however you occassionally go a bit too far and they can start making money off you from interest.

I'm definitely a Type 1 from MWHCVT's list - I use my credit card as a delayed action debit card and make sure I don't overspend.
 
Uneducated_Rick said:
I don't know if it's still true but it used to be better for your credit rating if once or twice a year you didn't clear the whole balance. You'd need to make at least the minimum payment to avoid a non-payment black mark, & then clear it completely the next month (a bit like taking 2 months to pay off Christmas)
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Not having a credit card in 15yrs and just a mortgage didn't prevent me getting a fairly large finance agreement on my car. The finance company have absolutely no idea I'm settling the finance this month after just one payment.
 
An ex of mine lived on her credit card and all she ever paid was the minimum amount and eventually even that became too much for her. She always spent money like there was no tomorrow and not just on essentials either, she couldn't pass a coffee shop without diving in and having not only a coffee but a slice of cake too and then she'd periodically have a melt down over the debt she was sinking into. It's just how some people live. I paid it off for her.

I only buy stuff if I can afford it and I always pay the debt it full once a month. I use my cards for buying on line and for stuff in shops I don't want to carry cash for like big purchases of several hundred etc. I see people buying stuff they can't afford and I wonder why. Why buy a BMW/Porshe when you can't afford it? I can accept that people need big purchases like a car and I can see a need for something like a Hyundai Getz but no one needs a BMW. At least in the days when I bought flash cars I paid cash. I see people going into debt for holidays abroad and phones and I think WTF? Go to Whitby for a week, buy a PAYG... That's just me though because if I had debt I wouldn't be able to sleep but some see being constantly in debt as a normal way of living.
 
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nilagin said:
The finance company have absolutely no idea I'm settling the finance this month after just one payment.
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I hope they don't penalise you, they certainly used to years ago, when clearing finance early.
 
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