Guestblog: Credit cards, leggings and shoulder pads
There have been a few articles I have posted recently that I have found interesting on the subject of consumer debt & credit. Two being the “Card Shark” article followed by the article on “Unsecured Debt Amongst British Females,” both 
quite controversial topics and at either end of the debt spectrum. http://www.womenindebt.co.uk/news
When there are the estimated 4 million female and 3 million male shopaholics in Britain do you think now is the time to be enticing us Brits to take on even more debt? Banks are being accused of luring us consumers back into the red with credit cards and store cards, with interest free benefits to encourage even more borrowing. Others offering double bubble; cash rebates and interest free periods for balance transfers aimed at getting us to switch our debts between cards.
British shoppers having amassed nearly £24 billion of unsecured debt during the economic downturn. Apparently a recession shopaholic is defined as someone who has built up more than half of their unsecured debt through fashion and grooming purchases. And as you might have guessed there are more female than male shopping addicts, with unsecured debt among British females totalling more than £13 billion, compared with more than £10 billion for men. Quite scary that we are being told that we are a nation of shopaholics and need to curb our spending habits yet we are being enticed to take on more debt through zero transfer deal and offers, however we forget or conveniently ignore (because that is our behaviour) that:
- There is usually a transfer fee up to 3%
- We rarely cut up or cancel those cards we have transferred from and continue to spend
- And worst of all we invariably don’t pay off the balance we have transferred within the offer period and pay soaring interest rates thereafter
- Oh… And then we do it again!
How fickle are we Brits? It took leggings and shoulder pads 20 years to come back round but for the credit card industry it takes only two or three years for us to forget how easy it was to allow the cards and the debt to mount up… Maybe we will have the hindsight to remember how we got ourselves out of that debt, by consolidating the equity in our houses – this is one moment in history that won’t repeat itself anytime soon. The consolidation option is definitely out for those of you who bought in 2007, with a report out today that says homeowners who bought at the peak of the market face four more years of negative equity and may now have to wait until 2014 before prices recover enough to make their homes worth more than their loans
With this year’s estimations that almost 147,000 people will be declared insolvent in England and Wales, which is up to 10 per cent on 2009. And around a million people are believed to be struggling to pay off their debts, is this a time to be being encouraged to take on more debt?
Georgina Earle
Director
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8 Responses to Guestblog: Credit cards, leggings and shoulder pads
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I’m a bit of a shopaholic but never use my credit card unless it is for online purchases which I believe is safer than using a debit card, but I pay it off in full every month, I can’t bear owing people money but I know so many people who are in debt and use their credit cards and max them out and they’re still eligible for another, it spirals out of control and before you know it you’re in serious trouble. It’s a big issue and I think people should really think before they spend. My philosophy is, if you haven’t got it, don’t spend it and when you have got it – save it!
Interesting point, Georgina
I’ve noticed an increase in the number of junk mail credit card offers, and even had a phone call from the bank offering financial advice – which turns out to be a sales attempt for loans and insurance and so on.
And yet the banks are still not so keen on lending to businesses.
Ann
Interesting post, Georgina.
I find this amazing “British shoppers having amassed nearly £24 billion of unsecured debt during the economic downturn…” £24 billion?! What on earth are people buying to amass that level of debt? It’s ridiculous and irresponsible to encourage them to take on even more debt.
Twitter: StudyingOnline
Yes it’s unbelievable; the report came out last week, stating that in the current downturn we Brits have racked up £24billion in personal debt! There are around 4 million women and 3 million men being defined as “shopaholics. And women account for £13billion of the debt and men the remainder. The average personal debt over the period is around £3425 for men and £3553 for women. But the very same week reports came out about the card sharks… Irresponsible lending and irresponsible spending are two ingredient which should not be put together…
I can be a shopaholic too; or rather I am when I can afford to! We are fortunate though for whatever reason to use credit cards sensibly. I have been in the industry long enough to see how easy it is to get trapped in debt for reasons beyond our control. And over the last 9 years I have watched people from all demographics use credit as an extension of their earnings, suddenly the credit dries, there is no more equity in the house and the lenders are knocking at the door wanting their repayments to be met. I like your philosophy though and maybe Women in Debt should post it on our web page, as one of our 10 tips to staying out of debt!
Banks and Financial Advice generally don’t belong in the same sentence…!
I have noticed the very obvious return to the high street of pawn shops and businesses where you pay weekly, which seems to be a strong marker for a recession.
I do find it bizarre that people who bought their houses in – say – 2007 – haven’t apparently paid off any equity. I thought the world was now wise to the poor value of endowment mortgages? I certainly always run a repayment mortgage, even though I’m no longer in a position to overpay it, sadly.
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