If you need urgent support, call 999 or go to your nearest A&E. To contact our Crisis Messenger (open 24/7) text THEMIX to 85258.
Read the community guidelines before posting ✨
Attitudes to credit cards and debt
Former Member
Posts: 1,875,648 The Mix Honorary Guru
I've really had my eyes opened lately. I go on the moneysavingexpert website to look for cheap deals and financial tips. A lot of the members of the forum there are people in huge amounts of debt, who post up their details for others to advise them.
I just find some of it so shocking. People seem to live way beyond their means and think nothing of using credit cards, store cards, loans. One of my friends is up to the limit on three overdrafts and has a credit card, but still goes out and spends money on stupid things, and then moans that she's skint.
Maybe it's the way I've been brought up, but if I can't afford something, I don't buy it. I would rather save up for something than pay extra to get it in instalments.
As I went to university, I have a student loan as debt, but I see that as unavoidable and don't really count it as a debt in the usual sense.
Why do so many people rely on credit and loans? Can they really just not do without a few luxuries?
I have to say that the banks make it ridiculously easy for people with a lack of self control to get into debt. I'm currently paying off an overdraft on a student account. When I went in to make a payment, the cashier asked me if I would like to open a credit card with them. FFS.
I just find some of it so shocking. People seem to live way beyond their means and think nothing of using credit cards, store cards, loans. One of my friends is up to the limit on three overdrafts and has a credit card, but still goes out and spends money on stupid things, and then moans that she's skint.
Maybe it's the way I've been brought up, but if I can't afford something, I don't buy it. I would rather save up for something than pay extra to get it in instalments.
As I went to university, I have a student loan as debt, but I see that as unavoidable and don't really count it as a debt in the usual sense.
Why do so many people rely on credit and loans? Can they really just not do without a few luxuries?
I have to say that the banks make it ridiculously easy for people with a lack of self control to get into debt. I'm currently paying off an overdraft on a student account. When I went in to make a payment, the cashier asked me if I would like to open a credit card with them. FFS.
0
Comments
The amount of times I hear people can't come out cos they've not been paid is shocking.
It's like no one saves anything, anymore.. and simply live from pay packet to pay packet.
Overdrafts in this country are the norm, whilst in other's an overdraft is illegal - you're simply not allowed to spend money you do not have.
The fact so many people are into those Christmas savings clubs which pays no interest is shocking - their only benefit is to protect people who can't control themselves - from themselves.
Financial planning should be a compulsory subject just like GCSE Maths & English ..
I think that is a slightly different thing you're talking about there... If they're not going out cos they've not got paid yet then they're obviously being careful not to get into debt... it might be that they just don't have enough left over after bills are paid and food bought to have any to save.
I agree with you that I think financial planning should be taught at school.
But then I reckon people that get into debt, it's more a self control issue than anything. I have a store card which I got to use the discount when opening it... I used it that one time, then paid off the full balance when I receieved my card; therefore paid no interest on it, am in no debt and got some money off with my purchase. Some people would get the card, not pay it off, or pay off the minimum amount, then spend some more on it, not pay that off either and end up having to pay off loads more than the original amount on the statement. Which I just don't understand... If you know you won't have enough money to even pay off the original amount owed, then don't get the card in my opinion... simple as.
But then my mum and dad brought me up teaching me how to be careful with money and I remember over hearing conversations between them when I was younger about them not being able to afford such and such. Meant I grew up not having all the new fashions and gadgets... But I'm glad of that.
It's a very valuable thing being able to be sensible with money.
I think maybe the people that get into huge amounts of debt are either brought up being used to having whatever they want so go to any lengths to get that and can't say no... Or they're not ever so bright and don't realise the dangers of credit.
The only time I would get a credit card would be those ones you can use abroad which don't charge for taking money out, and then pay it off when I got back off holiday.
Credit cards actually help improve your credit reference if used correctly, theres nothing wrong with having outstanding balances on there.
the problem comes when people only pay the minimum amount.
i think store cards are a greater problem.
i have to admit to being a big fan of credit card tarting, i have a balance on my current virgin cc at 0% for life as well as 0% on purchases. which is all good. its not a massive balance i have on there, about 2% of my annual income, so doesnt bother me in the slightest.
i also have another credit card which has next to nothing on it, but keep it to boost my profile, altho i think i'll close it or move to another one in the new year.
i do however have no savings at the moment and most of my wage goes on just living, so cant really afford to save money at the moment.
will do in the future tho
Cos I can have what I want, when I want. I hate waiting or saving up for stuff. Credit cards let me buy things now and pay later*
I have now cut up all my cards (apart from one) after maxing them out. I'm now in £thousands of debt but have learned my lesson (kind of)
*approx 2018 at this rate
you say that now, you are only young. they are handy things when used correctly.
eg. when i moved into my flat i needed to furnish the place, paid for the sofa's on the credit card at 0% on purchases and paid it off over a couple of months rather than spanking all the money in one go. the store offered credit at 29.9%, makes sense.
credit cards are not complicated at all if you read up on it first.
unfortunately i dont think i could live without anything to sit on. but people are different.
bad credit is bad. credit is not necessarily bad.
The problem is really the fact that they're so simple... to attain and use, anyway. The complicated part comes in the management and paying off of.
I had credit cards back in my Uni days. Just wanted to spend, spend, spend and go on mad nights out/weekends away... which I did. I'm a lot more sensible now, my fella has some credit cards for credit-building purposes I don't understand but I don't need them at this point so I don't bother with 'em. I have friends in HUGE debt to loan companies and through credit cards, they're all starting to get their act together right about now though, want to start again with a clean slate etc.
They're good to have and if you pay off the balance in full each month they can save you money.
My card has like 1% cash back and hardly any places charge you extra to pay by credit card, so at the end of the year you get credited back 1% of whatever you spend.
ALSO if the company you bought something from goes bust you can appeal to the credit card company for compensation if the amount was over £100 and many credit card companies give you some kind of free protection against loss and theft of items bought on their card for so many days.
Credit cards when paid in full are a useful tool.
I take it travelling and keep it seperate to everything else in case of emergencies or if my wallet/bag gets stolen and I pay for holidays on it, and then pay it off straight away. Use it for a few internet purchases too, because of the extra protection you get.
BUT I use mine soley for it's benefits, and pay it off so don't keep a balance on it.
My only other debt is student loan. It's far far far too easy to get into debt, it seems pretty much every time I buy something in a shop I'm offered a store card....
To be fair, people want the most comfortable life possible. They don't want to have to get up early, walk to the train station in heavy wind and rain, stand around in said rain for the train to be cancelled due to the wind blowing a tree onto the track and having to walk to the bus stop. Then having to jam in the bus like sardines with all the excess train passengers, half of them coughing and sneezing on you the whole journey, all for you to arrive at work/uni late, wet and miserable and receiving a bollocking for not turning up sooner. We want to run the 2ft from the house to the car, turn the heating up full blast and listen to some music while we drive by the bus stop and laugh to ourselves about the poor sods who didn't take a loan out to buy a car.
If they do have to get a bus/train, they don't want to have to listen to a bunch of fucking old people talk about their repulsive medical ailments the entire journey, or little fucking children who won't stop screaming - they want to block that out with an iPod and try and relax before they have to work the next 6 - 7 hours.
And when the weekend comes, they don't want to sit in feeling sorry for themselves, thinking about how everyone else they know is out unwinding from their week, so they go to the cash machine, go another £70 into their overdraft, and have fun before they have to repeat the same mundane routine over again. Oh, and it'd be nice to look good when you're out incase you happen to run into a lovely lady or a strapping young lad, so you buy some decent clothes as well.
Fact is, the cost of living in Britain compared to other countries is way too fucking high. People need to get into debt and live in their overdrafts if they wan't to eat or socialise ever again. If they don't, it becomes a routine of working to live with no time to relax, so you burn out and end up failing uni or fucking up at your job anyway. Hell, the amount of people I know who go to uni all day, get home, go to work Monday - Friday and don't go out at the weekends because all their money goes on rent/bills/food is incredible. Some even have to forgo meals when they're hungry because they actually can't afford to eat - and that's even without buying new clothes or going clubbing.
EDIT: Oh, and some have to miss days at uni so do extra-long shifts at work just so they don't get evicted from their flats. Again, this is even with them staying in at the weekends, or without them buying new clothes for the past six months.
I do have one credit card, provided by the same bank who holds my debit account, savings account and ISA account. I used it primarily to shop £50 a month at a supermarket and then have the account automatically zero'd via direct debit. I'm told that this is good to get a credit rating. This was my tool to help secure a mortgage in 2006, and it seemed to have paid off. Now that it has paid off, I don't use the credit card. For some reason though, my credit limit has more than doubled in the mere two years that I've had it!
When it comes to spending, I do go overboard on my occasional weekenders / benders, but make up for it by spending less in the interim weekends. I always keep £2500 in case a drastic repair job crops up.. i.e. roof leak, a break-in or replacing a defunct electrical appliance.
Student overdrafts are great and a big help - just as long as you know it's debt and that you'll eventually be paying it back... Credit cards make life a lot easier too, it's just about being careful with them - i.e. only spending on them what you can afford to pay bk in full.
I have a credit card that I put a lot of stuff on but I do pay it off every month (and its a bit easier to budget payments for it as I currently get paid weekly) I also save religiously and always have done since I started work.
Money managment really needs to be taught in schools, most people dont even now how the interest is calculated on their credit cards.
i have a partial maths degree and even i dont know how to calculate APR
i can do compound interest and simple interest but APR is another kettle of fish which is designed for comparison between different loan terms only
did you know creditcards when you pay off a debt partially, they use your moeny to pay off the lowest APR sections first, so you could still be paying back for that thing you bought in the interest free period
Credit cards are great if you use them properly. Mine gets paid off every month in full, I get cashback on everything I buy, and you get extra security when you buy things online. I don't see an issue with it. I never have more on my card than I have in my bank account. And just as a quick point, anyone who pays their car insurance off monthly, rather than with a credit card is an idiot. With the exception of Virgin Insurance, they all seem to charge close to 30% APR to do so. Pay it off with a credit card and I think you can get a 0% deal (and if not, you can get way less than 30%).
As for teaching it as a subject in schools, they already do. It's called maths. I think people know how to manage their money, at least the basic rule of not spending what you don't have, they just choose not to. Or they don't see the risk in signing up for an 18 month phone contract just for a shiny new phone, 12 months of Sky, 12 months of broadband and the rest (a 12-month financial commitment is still debt). I would support a scheme to get people in debt to talk about their experiences in schools though, in the same way that you might have an alcoholic in to talk about the dangers of alcohol.
The one issue which does piss me off though, on the part of the retailers, is the shops that offer interest free credit. I used to work in Currys (HSBC being the lender), and I can't remember anyone ever being refused credit. But the thing that irritated me was that it was structured specifically to make sure you failed to pay it off. You paid no deposit, a tiny amount each month, and then fully half of the balance was left at the end, which you had to pay off at once. Basically, it relies on your ability to save up the remaining balance yourself. And if they were capable of that, then they wouldn't be wanting credit in the first place. I remember someone telling me once that only 1 in 10 people who apply for interest free credit actually pay it off in time, and the rest end up with 29.9%. I don't know if that's true, but it wouldn't surprise me one bit.
But I've also gotta agree with Keizo. I honestly believe this is the most expensive country in the world to live in at the moment. Most other countries I've seen, it costs about the same to eat out as it does to eat at home, maybe a little more. In this country, you'd struggle to eat out for less than a tenner. Rent is ridiculously expensive. I was comparing Britain to Japan a while ago, and the difference is just insane. Some of my family moved to Canada years ago, and they said there's just no way they could ever afford to move back. It's just too expensive. If they sold their detached house over there, they would struggle to get enough for a pokey little terraced house in the shittiest part of the country (my town, in case you're wondering
I disagree I'm afraid. I work 39 hours a week, I'm married, I have a house, my own car. I can still afford to go out on occasion, I can afford to treat myself every now and again.
Because I save up for the things I want. If I went out every weekend I wouldn't have any money either, there are ways of enjoying yourself without buying the latest gadget every 30 seconds or getting drunk every other night.
As for not being able to afford to live e.t.c. at uni, unfortunately that is part of uni life. It's the reason I decided to quit after 1 year, I decided to get in the rat race early and get myself a decent job. Friends who went to uni who are undoubtedly cleverer than me and have more qualifications have not long left and are all stuck in the dead end jobs I stuck my nose up at 5 years ago. But I know in the long run they will probably earn more than me, that's the choice I made and the choice they make.
Unless they took a course with absolutely no vocational merit whatsoever. How many people reallly take up a career in pyschology when they leave uni.....:p
Maths as is currenty taught does basic percentages, arithmetic and mathematics (algebra and the likes).
Very little of it is applied to real life situations, like dealing with money etc. Yes you might get the skills from school maths lessons, but that doesn't tell you what APR is, or what any other kind of interest means, and it unless you're good at it and motivated you're unlikely to take the time to sit down and try and apply the maths you learnt at school to your current finances as an adult. At least if it was specifically taught then the language would be less of a minefield.
Well yeah, but if my memory serves me correctly, you actually have a decent job. You aren't working shitty minimum wage hours or just above to fit around your studies. This is the only real thing I have first hand experience of as myself and pretty much everyone I know opted for the uni route, so that's what my post was mainly applying to. We don't have "every latest gadget" either, as to be honest, noone really gives a shit about them seeing as we're not children. We have a phone, an mp3 player of some description (I'm using a knackered 4gb iPod Mini from about three years ago... battery cuts out after about 20 minutes use but I can't afford to buy a new one, so I don't), and either a PC or a laptop for uni which was bought either by parents or using a student loan. Noone I know (besides the non-uni ones) goes out "every other night" either, as they can't afford to, are working, or need to study.
As for you saying it's part of uni life. Well, maybe so, but then again that pretty much just proves my point. What are uni students supposed to do? Eat once a day because that's all they can afford to so as not to "live beyond their means"? That's not healthy and it isn't exactly good for concentration/whatever, so they will go another tenner into their overdraft so they can afford another meal even although they're still not eating anywhere near what they should. That's a problem with the system in this country rather than what students do to make sure they eat, stay clothed and have somewhere to live.
Oh, and that doesn't even address the problem of people who work full time in minimum wage jobs. Whatever their reason for doing so (no ambition, fucked up at school, physically can't do anything that pays better) is irrelevant; if they weren't doing it, someone else would be. It's how the system works, we need people to do the shitty jobs noone else wants to - but they're still people. People who want the same things everyone else does. People who don't want to be stuck in the routine of getting up, going to work, coming home, sitting infront of the TV and repeating. Sure, ideally they'd only go out when they could afford to and never buy anything "nice", but how long do you think you could work in a shitty retail job, just paying bills, buying budget food, watching TV and going out maybe once every month and a half because that's all you can afford before going completely batshit crazy and losing the will to live?
Whether you agree or disagree with what I said, you cannot deny the facts. Britain has one of the highest tax rates and costs of living of any country in the world, and we're the ones with this insane amount of personal debt. Not to mention the costs vary between places in the UK, with the big cities being way pricier. Sure, a student may have it bad in Derby, Cornwall or Auchterteuchterville, but it's a shitton worse in London, Manchester and Glasgow.
I can do compound and simple intrest but APR goes straight over my head and I work in accounts! Credit cards are a bit crafty in the way the apply your payments, often the interest is the first thing they go agisnt.
And the maths taught in schools needs to applied to real life situations and it isnt. Kids should also be taught the good/bad points of credit cards/loans/overdrafts and when to use them. and Ditto for differnt bank and savings accounts. And telling people when they apply for student loans how and when reapyamnts start is a good thing, and how they are liable for tax and NI as a student because I'm fed up of explaining that one know.
Debt does cause people unhappiness and create trouble, but that's no reason why it should be disallowed across the board. I could apply that to quite a lot of things in this country, of course.