No wonder there's a debt crisis

[undebted]

Just read this in the guardian, made me reflect a bit. When I turned 18 I got approved for a Barclaycard with a £2.5k limit, felt like I'd hit the jackpot. It spiralled pretty quick from there as it was a perfect combination of being clueless about finances, how interest rates actually worked and long term impacts/credit scores (perhaps school could of taught me that instead of pythagorus theorem, of which I remember the name and nout else!) and a lifestyle that involved wanting to go out drinking a lot, keep up with mates and have the latest clothes and tech, a nice car. By the time I was 22 I had 2 maxxed out credit cards (6k total) and a loan of £6k I was missing payments on. I ended up royally screwed and learnt my lesson the hard way with destroyed credit rating and a 5 year debt management plan. It was of course entirely my fault, but the fact that £12k credit was available to a very young adult with a part time minimum wage job was crazy to me.

It's been a couple of years since my plan ended and all my debt was repaid in full. My credit score is improving but still not great. I got an Aqua card a year ago to use everyday then pay off in full every payday which I do, I've accepted every increase as it is supposed to help my score but I never put more on it then I can pay off the very next payday as the interest rate is 49.9% APR. They've given me £3750 now on that card with that interest rate. The rate is insanity so I've recently applied for a different credit card and been given an automatic £5k limit on one of them. My clearscore shows that I'm fully 100% pre approved for loans of up to £7k. With a credit score full of defaults!

It's just no wonder is it. If you're hard up, which unfortunately so many people are and are going to continue to be in this economy, it's only going to get worse. People need money, and are offered so much at the click of a button. How is this right?

The availability of large lines of credit to young people who haven't necessarily developed a good level of impulse control is a disaster waiting to happen. There is also so much social pressure to keep up with the latest trends and have a "perfect" and "interesting" life. And when you are that age you generally do care about what people think of you.

I was bright, academic, taught about interest, debt and finance at school (00's education). I still took out a credit card at 19 and racked up close to £5K on holidays, going out, clothes. I was repaying minimum repayments for 3 years whilst this grew and grew.

Eventually I realised this wasn't sustainable and needed to grow up. Went to uni, had an extremely tight few years and managed to pay it off by the time I was mid-twenties. I'm grateful my "Grow Up" moment happened before I'd gotten myself into more trouble.

I still have my "uni" credit card for emergencies as it has a massive limit (12k).

Pythagoras is useful because you wouldn't be able to post here on your phone/tablet/computer or communicate without it 😉

Ideally it'd be taught both at home and school, along with other valuable life skills. But the government wouldn't want it as the economy is propped up by us all being in massive debt.

I tried to decrease my credit limit on my bank credit card , but they wouldn't let me and ive been a customer for decades.

Not arrogance at all. My DH is an accountant. We had children and not enough money to pay for them. We were young and I got into debt before we met. He took it on but even he couldn’t sort it out and keep us fed on what we were bringing in.

I got myself onto a right mess. In 90’s and 2000’s lots of shops were offering credit accounts and catalogues and I quickly started getting accounts without really understand interest when I was 19 or so. I then bought a new car on finance seemed like a great deal with ‘free’ insurance. Then I had a baby at 21 and was working part time and quickly realised I could not afford any of the repayments and the interest was very high. I honestly wasn’t taught a thing by parents about money. My ex talked me into getting a consolidation loan for my car, the credit accounts and his loan when he took his EXGF to Florida. Fucking mug me… did it. He then was a controlling unpleasant person and restricted all my money this way

well 5 years later I was homeless, skint, CCJ’s on record and took me YEARS to pay it all off, get rid of the CCJ, get back on my feet. I am scared of credit now and read everything super thoroughly and work it all out before ever committing to anything. I have 1 empty credit card with some stupid £5k limit that I never use just for an emergency which I hope never happens!

my parents never learnt though and always in money problems. The CCJ really did me a favour - I couldn’t even get a mobile contract so I had to live within my means and it meant I had to learn a lot about making your money work for you

I meant to add that I taught my DC about money very early on. They got bank accounts age 11 and managed their own pocket money. They both have part time jobs now and I still give them money advice now

I still have a theoretical credit card (have the account but throw the card away when it comes). That is my absolute emergency, last resort. Even then I'd have to call and get a card sent.
I have learned I'm not to be trusted. Dh has a credit card with 2.5k limit that we use for things like tickets sometimes and that is paid off.
But there is something that appeals to me about credit in general. Thank god I've never started gambling, its much the same character trait i think.

Yes it's a really privileged argument. Parents should also keep their children safe but we don't want to do away with safeguarding procedures do we? Sadly some parents don't or can't do everything that is needed to set a child up for a future so using that as an argument for school not to is very unhelpful. Cooking, seeing through marketing ploys and financial management would all seem to be excellent things to teach in schools.

Gambling is an interesting one as I play the lottery and in a syndicate too ( roughly ten pounds a month ) , but nothing else , but I still add up the money I've wasted on it over the years and think what else I could have done with it instead! It must run into hundreds since we started it in 1995.
How people can lose thousands in one sitting at a casino or online etc I've no idea ! I just couldn't do it , but happy to spend a few pounds on a lottery line knowing I won't win any way. Gambling causes as much heartache as people who drink or take illegal drugs too and I can see why it's addictive.

Because our debt makes them a lot of money, obviously, they want us to be in debt. You're right though, kids need to be taught this in school. I wasn't, nor were my kids. I had to sit and explain deductions from her payslip and how income tax works to my 22 yr old this week, which I've only learned from experience, and I still couldn't fully explain credit cards and ANPR to her. I talk about good and bad debt though and how to control it.

If you have savings, why can't you just pay for the flight on a debit card?

You don’t remember what you were taught at school so maybe you were taught about finances and interest. I certainly was.

I don’t think it’s morally wrong to offer debt to people. Banks do so affordability checks but it’s for an individual to take responsibility for themselves at the end of the day. Actually a lack of affordable debt is a big issue for poorer people which means they end up paying more than they need to for things. Eg it’s cheaper to buy a new washing machine than to go to the launderette.

I was in debt when younger as I overspent. It’s easy to do. But it was my fault and my responsibility. I learned my lesson and now am more careful. But I still have borrowings.

ultimately you have to be able to manage your own finances- it’s no one else’s responsibility.

I had the same issue when I was young. I split from an ex-partner (financially abusive), and then I had relatives pass away, so I went off the rails. I ended up on drugs, drinking heavily, and wanting nice things but in 20k of debt within a year. My mum is always in debt, and my other relatives are, so I never knew about financial planning.

I met my partner (who is very, very sensible), and in the same week, he made me set up a Stepchange DMP. I managed to pay it off in just over three years through working and going to Uni. Although the lockdown was terrible mentally, it did help me get out of debt.

I will never get an overdraft, nor will I get a credit card. But I do have a Loqbox where I pay £20 a month, and I have seen my credit score increase. I understand that they'll take £30 off me when I ask for my funds back, but I did it more to increase credit score.

@Whatiswrongwithmyknee there is protection available for credit card spending eg if the airline goes bust or cancels abs refuses to refund. Debit cards do sometimes provide it but not all abs it’s voluntary.

While thing is, of you pay it off info full every month the rate doesnt matter.

I disagree it's the job for the school, money management starts at home.

I do agree with your general point that credit is immediately advertised to 18 year olds.

Personally I'd like to see the likes of Klana and clear pay gotten rid of.

I had some credit cards I didn’t use for years abs they were all pretty much shut down. Banks don’t tend to like to leave them dormant. I now have one I put all spending on (get points) and one for emergencies that I put a monthly bill on too ok keep open. I always pay off both in full.

I love Klarna because I'm lazy. I shop online a lot & return a fair bit.

I agree offing that amount of money to basically a child is insane.
My first credit card had a limit higher than my yearly earnings! But they dont make money off me because I always pay it off in full.

Why do automatically assume debt is bad thing?

@ChiselandBits thanks for confirming it is actually taught in schools. I remember it being taught but I didn’t stop me getting into debt or overspending when I was younger. I needed to learn from experience as well.

Same here. Split up with partner in 2004, was renting a one bed flat. Suddenly went from two incomes to one paying everything so I’d put the shopping etc on my one credit card. It got worse and spiralled out of control, ended up with 4 maxed out cards, paying the min each month and living in my massive overdraft (which cost me £60 a month in charges too). After paying my rent, bills, credit cards I had £22 a week for food, public transport (£5 a week on my Oyster card) and other living expenses. I remember stealing tea bags from the kitchen at work on a Friday to see me through the weekend. I also joined a Church group as they did a weekly evening thing with a meal so that fed me. Eventually, I saw Martin Lewis on TV and he mentioned CAP (Christians against Poverty). It changed my life. I entered into a DMP, cleared all my debts in just under 5 years.
I finally (after the 6 year period after the DMP finished) was able to get on the mortgage with my now DH and we moved house. I have no credit cards at all or even an overdraft now.
I fully accept my debt was self inflicted, but it snowballed purely due to having one income - I couldn’t move to a cheaper place in the country either as my job was where I lived. CAP were incredible, I actually donate to them monthly now.

@sst1234 that point was referring to other posts about education & he was in "bad debt". My first post said debt can be good so your assumption is wrong.

49.9APR! I wish Santander would pay that on their 123 account, at the moment I get 0.50% interest.

true dat!