Credit Card Debt are you one of the people who only pay back the Minimum repayments?

old golfer · 19th July 2007, 10:01

I found this very interesting it can take you 30 years to repay your debt if you pay the minimum payments to the Credit Card Company...

Makes your purchase very expensive.. did you really need it... should more care be taken or should the Credit Card company's not offer so much credit to those who can least afford it?

One in 10 credit cardholders, the equivalent of about 3.5m people, pays back their debt by only the minimum repayment each month, according to price comparison website uSwitch.com.
The website said that on average credit card companies set minimum monthly repayments at 2.6% of the outstanding balance, with 35 card providers setting them at just 2%.

If someone with an average credit card debt of £1,812 repaid their balance at a rate of just 2% a month it would take them 29 years and two months to clear it and cost them £2,858 in interest, it said.

But if people increased their repayments to 3%, it would halve the time taken to repay their debt to just over 15 years and only cost them £1,257 in interest.
"In an environment of rising interest rates where personal debt in the UK has reached a staggering £1,325bn, consumers could now finish repaying their mortgage before their credit card.
"Despite the introduction of 'health warnings' on credit card statements, the implications of making the minimum repayment each month are still not clear enough," said Mike Naylor.
The group is calling on credit card firms to raise their monthly minimum repayments to at least 3%.

Well are you caught in the Debt trap.. the old saying use to be if you cannot afford it don't buy it.. sort of makes a lot of sense.....

Geordiecraig · 19th July 2007, 10:07

Thats interesting Old Golfer.....

I have two credit cards....one personal card and one corporate card. The personal one i have had since I was a student and used it to live on basically. And at that time yes I did only make the minimum payment because that was all I could afford...
Having a card as a student has led me to despise credit card companies. I think they deliberatly target vulnerable people..ie. students, low income familys etc...
They know fine well that they can make money on missed payments from these people....They tempt people in with "offers" and then reap the rewards when the customer starts to struggle....WEASELS!

torrenter · 19th July 2007, 10:22

As soon as you have a credit rating, switch to a debit card.

I keep a credit card (never used so far) for ´dire emergency´ in the same vein as my unused mobile phone kept in the car glove compartment.

Paying minimum payments on a credit card - you might as well get a loan from Carol Vorderman´s outfit and fear the big men with baseball bats - they´re more sympathetic than the credit card companies.

Janet · 19th July 2007, 10:37

Same here Torr, pretty much emergency only, or booking things online. Agree with OG, if there isn't enough money to pay it back at the end of the month, we can't afford what we're buying.

But they are really useful for real emergencies, when it would be worth paying the premium for having instant access to such sums. The problems start when they're used to cover everyday expenses ... because by definition, there's no way to afford the repayments as well. And it's this need that the lenders capitalize on, and this is when it becomes, literally, usury. Quite agree, Craig, weasels!

hannibal · 19th July 2007, 10:46

I think they should change their name from credit cards
to instant debt cards, people tend to try and avoid being in debt but it seems to be OK when its on your " Credit Card"

KirstyJay · 19th July 2007, 11:06

I hardly use my credit card now, especially since Caja Canarias have started their online 'virtual' credit cards that I can generate, use to pay and then delete. It's a lot safer paying with them too, as they only exist for the short period I use them for and the money comes directly out of my account.

What annoys me is how they give you bigger & better CC's the more you don't use it! Inow have several platinum cards, but I'll be damned if I'm gonna use them... unless it's a mega-emergency!

I hate debt... I don't owe anything, however I always seem to have a fair bit owing to me

I'd rather be skint than in debt.

videotalker · 19th July 2007, 11:11

Nobody forces people to use credit cards. If people are sensible they can be a great thing to have in your purse. Who do you know these days who carries large amounts of cash on them? Credit and debit cards have replaced money for many people. If they cannot pay their balance off at the end of every month, they only have themselves to blame.

Yes I think the credit card companies are exorbitant in their rates, and I know they suck vulnerable people in, with their slick advertising and the way they make you think you deserve to have what everyone else has. At the end of the day, how many of us have gotten our credit card bills in and can't even remember what the £35.00 in M&S and the £28.00 in Wallis bills were actually paying for? I do this EVERY month!

These cards make it TOO easy to spend money that we don't readily have, but that is not the companies fault - it is OURS for being so greedy in the first place!

barrydavies · 19th July 2007, 12:06

Quote:

Originally Posted by videotalker
These cards make it TOO easy to spend money that we don't readily have, but that is not the companies fault - it is OURS for being so greedy in the first place!

Quiet Right.

The rule is use them do not them use you.

Janet · 19th July 2007, 12:11

Provocation is a legally definable concept, and I think that the tempting way that what one can buy with these cards is advertised amounts to "provocation" at times. As such, it is intentional ... and therefore it IS the fault of the credit companies ... at least in part. I don't think it's as totally simple as "we don't have to use them".

torrenter · 19th July 2007, 12:46

Quote:

Originally Posted by hannibal

I think they should change their name from credit cards
to instant debt cards, people tend to try and avoid being in debt but it seems to be OK when its on your " Credit Card"

Spot on. A ´loan shark in your wallet´.