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?

We actually had to buy a car in October, possible because instead of repaying debt, we had been able to put money by.
Hence the need to save for the cooker.

Fortunately we have several exterior doors so we've locked the broken one and ignored it until the new one arrives, by reassigning the money we will get it sooner. They take ten weeks to be made so I guess if we didn't have the money we would just have to manage without using it for longer.
In short, we would manage.

49.9%!? That should be illegal. You'd probably get a better rate from a dodgy backstreet moneylender. But don't.

I haven't RTFT, but every single month for years I have received an email from PayPal that says 'Congratulations! You have been accepted for PayPal credit!'. I had one credit card about 20 years ago, paid off about 15 years ago. I have never asked for PayPal credit. AIBU to think it should be illegal of PayPal to try to get me into debt in this way?

Experian messaged me a few times this week, once was to tell me that I was eligible to apply for 38 credit cards.

Today I was told I can apply for six loans.
Don't need any of it Thank God, but I can see how people are tempted.

THIS 💯

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Im in a lot of debt.
Its bad spending habits and the freedom that i could buy whatever i wanted with a credit card... then it became two then three.

I now have a £20k consolidation loan (even just typing this gives me the heebie jeebies) and a credit card with £900 on it.

My parents are money savvy both having large businesses but i grew up with them spending 100s like its nothing and ive somewhat tried to continue into my adult hood with me buying lots of stuff that i couldnt necessarily afford.

Im not a victim here i know exactly what i was doing.

2022s plan is to pay off the cc and get the loan into the 17s. Maybe even 15s if i can stretch it.

The shame is the hardest part it churns my stomach daily. No one knows in my life how much i am in debt but me. (And now a bunch of random strangers on the internet). No one talks about these things and i can see why people take their own lives over it.

People need money, and are offered so much at the click of a button

and yet, because I don't use my credit card often enough they reduced my credit limit. In December I had a new gas boiler and I wanted to pay for it by credit card, so I applied to increase the limit again. I was turned down (husband paid it on his card). Then I got a letter saying because I hadn't used it for a while they were going to close my account altogether. Well, they could have increased my credit limit again when I asked.

It doesn't seem to me that they are giving credit away.

Although - while I've been typing this, it has occurred to me that they like giving credit away to people who use it and pay interest and get themselves into debt. Not people like me who use it occasionally eg for consumer protection or for cashflow reasons and pay it off each month.

I do think a lot of people keep up with the Jones's by using credit. They certainly buy expensive cars on credit. I have always wanted to live within my means, other than the mortgage - there aren't many people who can save enough to buy a house outright.

I know how you feel. It comes over you in waves and makes you feel sick. Have you looked at CAP - the debt support charity? I was exactly where you are 12 years ago, I worked out it would take me 77 years to pay my debts at the rate I was paying them.

@Halloweenadoodle you'll feel amazing when you pay it off. I was embarrassed about the debt I got into but I'm pretty proud of myself after years of chipping away at it. The MSE forums are great if you ever need any encouragement.

I think the world turns on credit and if you are sensible you can make credit work for you.
The problem stems from people not being realistic in their spending habits and using credit to get bargains or stuff that they really don’t need that by the time they have finished paying off the credit card, with interest at even a low percentage rate for a credit card the bargain begins to look extremely expensive.

I wonder whether there is a calculator that shows the actual amount if you put say a family holiday on credit card and paid it off over the next 10 months or the cost of a shopping trip put on credit card and paid off over the next year

And then comparing it to how many hours / days/weeks etc you will spend working just today off the interest.

Would people be put off spending and the actual cost would make people stop and think about costs.

I think credit cards and loans have become a normal household expense for a lot of people

A case of paying a set amount towards your credit cards each month without really looking at interest rates or what you have bought.

@Halloweenadoodle important thing is you have a handle on it now and are taking steps to sort it. Good on you I say.

Sounds like it is in hand. I was just never like this. Even as a teenager I had a note book in which I wrote everything spent - ever 20p on a bar of chocolate! I recently found one from age 17 and always been a bit like that. I don't use credit at all (other than a mortgage on the house).

I think that in some ways the question of whether it's schools or parents that should teach how to manage things like credit, is the wrong question.

The people who really benefit from all this debt are the people who are collecting the interest payments. Our economy is built on the continuous escalation of our consumption, and debt is an integral part of the scaffolding of that in order to enrich the few people who own the majority of the world's assets.

There is no real interest in helping people reduce their reliance on credit, because then they would have to live within their means and consumption would go down. The economy would grow more slowly, and we can't have that.

It's difficult to put too much blame on individuals when for decades now the people have been encouraged, both through advertising, through changes in lifestyle, and also by the structure of their local economies, to use credit to function, and to feel the need to buy whatever the advertising people tell them they need.

Unfortunately, there are too many people whose parents are not in a good position to teach their kids financial sense, and it can lead to a downward spiral easily. At the same time, just because parents are sensible doesn't mean kids will be.
I know I will be teaching my kids about money. At the same time, I don't intend to give them access to much until they can prove themselves.
The best way of learning the value of money is to earn it, in my opinion. But its important to give everyone basic financial education.
The one way to give everybody a level starting point is if school curriculum included classes on financial literacy.
Flip side here are the macroeconomic biases - how does the school curriculum find a balance between spending vs saving,when both have across value in macroeconomics.

These threads always have the “it should be taught in schools” comments.

It is. To me in 1980s, to my children in 2020s.

But anyway… even if you can’t understand how compound interest works, you know that you have to pay the credit card back. And you know from the very first statement that interest has been added. And the second. And the third.

It’s not the lack of education driving this. It’s the lack of personal responsibility.

Two things I’d like to see change:

• less access to credit, as OP suggests


• less options for just wiping out debt - I know far too many people who have basically used a get out of jail free card, and learned nothing from it