This is an interesting one. Someone from PwC was on the news today wringing his hands about how dreadful it was that people were paying off their credit card bills. It’s the end of the world as we (or rather he) knows it.


http://www.bbc.co.uk/news/business-16905144

This is standard behaviour in a recession isn't it? People take out credit when times are good and pay it back when times are hard. Even though logically we should do it the other way around. It happened when dotcom went pop and it happened in the recession of the late 70's. Before that, there wasn't a whole lot of personal credit to be had anyway.

If the bloke from PWC thought this was a new thing, well, it just kind of confirms my opinion of them frankly.

Jon

I've tried getting credit recently - I can't. And I've been in full time employment with the same firm for nearly a year, which is a change for me.

That makes no sense to me. Borrowing on a credit card is miles cheaper than a pay day loan. And there are plenty of ways of borrowing that are cheaper than a credit card.

You can't "borrow" here on a credit card. The balance is automatically paid off at the end of the month, in full. If your bank account can't cope with that, you have to arrange for an overdraught and if the overdraught limit has been reached, you are screwed. Well, they will lock your account (and credit card), I think you get some pocket money for food.

Being in debt is still shameful for a lot of people here, especially older people. It does happen, when people lose a job, for example, but a lot of older people will not take out loans. Most of the debt is utility bills or catalogue stuff, that they ordered, then couldn't afford to pay for and have to pay the bayliff on a monthly basis.

The culture of save to buy is still strong among a large part of the population.

The younger generation is more willing to risk getting a loan for immediate gratification, this plus easier to obtain credit over the last decade, means that the younger generation are in much more trouble than the older generations.

Even when I was in England, I never put anything on my credit card, that I couldn't pay off at the end of the month. I think I paid interest 3 times in over 20 years and that was because I was working away and was late sending off a cheque to cover the bill.

When I first started work, I was spending about 1000 a month on the credit card (hotels and meals) and I had a 250 limit. I'd pay the hotel bill in Plymouth on the Friday morning, drive back to Southampton, fill out my expenses, get them cashed and drive to the bank and pay off the credit card, so that I could pay for the next weeks hotel bill!

I believe that's called a Charge Card over here.
My compant tried to force evryone to get one a few years ago. We all told them to get lost as they were so slow at paying expenses, there's no way we'd have the money in time to pay it off every month.

I suppose the restrictions on pay day loans are the appeal here, if you just need something to help you get by for a few days. They have an agreed amount and pay-back date, whereas credit cards seem to regarded as too convenient and the balance just mounts. Either that of the majority of people seeking these pay day loans have already maxed their credit cards and have shelved them until they can reduce the balance.

Indeed, I owe a mate a hundred quid and rather than put it on a credit card, I thought about a payday loan as I get paid on Friday and if I put it on a credit card, it'll just add to what's already on there and I have to pay everything else off before I pay that off. In the end, I've just borrowed the money off my parents.

The BBC ran a storey a few weeks back about pay day loans and pawn brokers. It seems that the APR from a pay day loan is massive compared to that you’d get from a pawn broker.

Yeah, but isn't that only because pawn brokers have been edged out of the market, so they're offering better deals to remain competitive? Just something I vaguely recall from an article late last year.

Here they are still called Credit Card (Visa and Mastercard).

I used to have a Diner's Club from Cap Gemini, when I worked there. We were supposed to use it for expenses, but we had the same issues. If you spend 5K on flights and hotels in a month, how are you supposed to pay that back at the beginning of the month, when they pay the expenses 20 days later?