CREDIT CARDS COMPANYS SHOULD CAP CARDS

[johnpaul]

does anyany agree with me that credit card companys should put a cap on the amount of credit cards you have and limit us to thats say 1 and pay it by direct debit as i think this might stop people getting into debt

JOHNPAUL

[Adam Davies]

Hi
No,that would be too much control.
What I would like to see is the automatic increases stopped and replaced by invitations to increase your limit,in association with an affordability test.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[Storm]

It should be remembered that the significant % of consumers use credit responsibly and don't over extend.

Affordability will be at the center of credit decisions going forward.

[johnpaul]

andy can i ask something if i may before i went on the dmp plan i had 5 credit cards and they uppered the limit even though i had loans and did not ask me to hand them in but i think what should happen is to the the credit cards only by direct debit set one up for i say £200 per month i do agree about uppering there limits how many times did they do it to you and how many credit cards did you have before your iva

JOHNPAUL

[johnpaul]

i agree storm

JOHNPAUL

[kandh]

I second that Andy!!

I know that it was our own fault for getting into debt but the automatic increases did not help us whatsoever! We would reach our limits on the cards then all of a sudden we would have an extra £500 to spend (which was just as quickly used up on other bills). This just delayed us finally realising that we had a major debt problem. The limits were still be upped on the day we stopped making payments in readiness for the IVA.

If we had to do the affordability test, we would never have gotten so far into debt. Banks are also to blame though for offering "pre approved loans". THis is what finally brought us down. We had 2 credit cards and a current account with £1000 overdraft with one bank and they approached us with a loan to pay off the 2 cards and overdraft. They had already looked at our current account, worked out what we had coming out each month, what our surplus was and offered us a loan based on that amount being our repayments each month. What they failed to realise is that surplus was what we had to live off for the month, ie food etc. Obviously being really stupid and naive, we took their offer of the loan to pay off the cards but then realised that we then had to use the cards to pay for food and petrol for the month.

Hence 10 months later, we entered into an IVA!

Kerri [:)]

[johnpaul]

it would be nice to only have one credit card per person instead of 2 or 25 credit cards and review you every 12 months and check your credit file to see what level of debt you are in

JOHNPAUL

[Storm]

UK consumers are not used to having to disclose income and expenditure when applying for credit. 'Easy credit' means simple application forms and quick processing.

Credit files are as good as the information available... a number of expenditures are not on the credit file, utilities, council tax, shopping, school fees etc etc. Only 40% of mortgage payments appear on a credit file.

Calculating a true indebtness figure is nearly impossible. The rules around data processing and reprocity means a lender can't use the information specific to your card useage to analyse credit performance.

[Adam Davies]

Hi storm
Can lenders see your credit balances when they do a search with the credit reference agencies ?
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[BECKY]

I think , when increasing the limit on cards, there should be a note in saying what the minimum payment per month would be if the limit was reached. It would have helped me realise how much I would need to find per month to meet the repayments as saying u pay back x% or £5 minimum per month doesnt really make u think about the amounts of money involved.

[pixie]

I like that idea Becky, It would also make you stop and think if they put the interest amount on there as well.

[Storm]

Depends on the credit type Andy - one method I have implemented for a major card provider looks for 'balance transfers' ie moving balances from one card to another using the opening balance data available but it is eratic to say the least.

Secured and mortgage debt is the hardest to track - eg Halifax don't report mortgage balances... only two of the UK's motor finance companies report payment / balances.

[Storm]

This has been recommended recently Becky under the Treating Customers Fairly rules coming into place.

[BECKY]

I definately think its something banks and cc companies should consider. Obviously its too late for most of us on the forum but could prove very helpful for other consumers with keeping track of there outgoings.
oooh Im rather impressed with myself now its not very often I have a good idea[:I]

[Maz]

Yes I believe this would be a good thing to put in place for CCs as this would give you the actual cost of your borrowing per month if it reached certain limits. I know thid would have been a deterrent in spending because with CCs the amounts just creep up eventually but with a table showing various amounts and the monthly payment next to it I would think twice!