Credit card bonanza as banks seek new business

  TopCat® 14:53 02 Oct 2008

Nothing wrong in that I know, because they are naturally in business of making money. What does concern me though is the way they are going about it.

Listening to the Jeremy Vine show today I heard some alarming stories of how easy it was for people to get new cards from some banks, even though one person - a BBC researcher - readily admitted he had two other credit cards. This person was able to get around £8,000 of credit and cards after about fifteen minutes on the phone. This is fine for those that can afford the repayments but, as postal credit card offers fall through the door, I can't help thinking it's a great temptation for many in dire financial difficulties to get some relief, however brief that may be.

This link gives further stories on various offers received by people, and the programme itself can be heard again later from the webpage 'Listen again' link. TC. click here

  GANDALF <|:-)> 15:23 02 Oct 2008

I seem to remember someone recently on the forum who said they were in banking and whining that the crisis at present, was nothing to do with the banks. I am aghast at the stupidity of banks and their job-clinging employees.


  Forum Editor 16:07 02 Oct 2008

when times are good, people can't wait to use the banks to help them buy houses, cars, boats, etc., etc., with abandon. The banks, like any other commercial business, are happy to oblige, and do so in compliance with the banking regulations laid down.

Then when times get hard, and irresponsible people find they can't make the payments on the money they borrowed, they whine that it's the bank's fault for lending them the money. I'm fed up with hearing such rubbish. It doesn't take an Einstein to work out that if you borrow money you must repay it, and if there's the slightest doubt about your ability to do that you shouldn't borrow in the first place.

Blaming greedy bankers is childishly naive, and simply confirms the fact that you don't have a clue about how the world works. I'm sure there are some greedy bankers, just as there are greedy bus drivers, or doctors, or whatever, but making wild, sweeping statements about the present financial crisis being all the fault of the banks is quite ludicrous.

  mrwoowoo 16:38 02 Oct 2008

A female neighbour was declared bankrupt about 3 months ago due to taking on too much credit.
They still have four cars, a horse box and of course two horses.
How is this possible.
Perhaps the debt was all in her name?
From the outside it looks very tempting to run up thousands of pounds worth of debt and then have it written off and carry on as normal with no debt.
How does it all work?

  mrwoowoo 16:40 02 Oct 2008

"Perhaps the debt was all in her name?"
Sorry,forgot to mention that she is married.

  GANDALF <|:-)> 17:57 02 Oct 2008

Banks can be totally devoid of responsibility when lending money. You only need to see the proliferation of self-assessed mortgages, 100% to 125% mortgages and the easiness of taking out a credit card or a loan.

Yes, people can be grossly naive as well but banks need to take some of the responsibility where laying out dosh is concerned. When I first applied for a loan, many years ago to buy a knackered house, I was dragged before the bank manager who went through my finances with a fine tooth comb.

The banks are jolly good at keeping their profits private but wailing and whining when they make huge foul-ups in the money markets and then have the cheek to demand Government backing to sort out their debts which suddenly become the public's property and that we, the general public, should support them.

This nothing to do with greedy bankers but is to do with inept, ill-educated business decisions and spreading money into financial vehicles that had become merely paper shifting profits which were repeated over many years including the blatant pushing of unsuitable financial packages from an industry that demanded self regulation in business direction.

Pity the Government chose not to support other industries that needed it. If banking had been any other business we would all be raising the middle finger and saying 'tough luck'. Apparently they are special....only when in trouble.


  TopCat® 18:19 02 Oct 2008

heard one person noting that their credit limit had been raised much higher without any notification from the provider. The reason put forward was that the customer always paid up in full each month, which is no way beneficial to the banks, and they hoped the customer would draw on this higher credit limit and thereby finish up paying their interest charges.

In another case, a customer's APR had been quietly raised to 34% without notification, which worked out, it was said, at 3% interest per month on repayments. I would say one needs to remember to study hard the 'fine print' on any credit option in these troubled times. TC.

  Forum Editor 18:38 02 Oct 2008

when it comes to a crisis like the one that's developed recently should be pretty obvious.
If a biscuit factory fails it's not much fun for the people who lose their jobs,or for those whose business it is (the shareholders) but that's about it.

If a major bank goes under the repercussions can be formidable - other banks may follow, and unless something drastic is done hundreds of thousands of account holders are in real danger of losing everything they've got. Bank failures are to be avoided at almost any cost. The Northern Rock rescue was undoubtedly hugely embarrassing for the British government, and for those people in the bank's management team who had certainly not been reticent when it came to taking what one might call ambitious business decisions.

In the past banks were far more reserved when it came to consider loans - they lent money to people they knew, and they used money that was theirs; there was no selling of Collatoralised Debt Obligations (CDOs), and no lending unless someone was pretty sure that the borrower had the resources to service the debt. Times,and lending policies change, and they changed big-time when banks started to pander to our penchant for living on credit. We're past masters of it in the UK; prior to the current troubles we had acquired so much personal debt it was at one point higher than our GDP. We quite literally went on a borrowing spree, and it's certainly true that the banking industry was a willing partner in this - that much is definitely not to their credit.

As far as I'm aware the banks didn't go knocking on doors with loan agreements in their hands however. Someone has to ask for a loan, and we did it in our millions. Now that the party is -for a while at least - over it's a little simplistic to say 'it's all the fault of the banks', because that's just not true.

We're all at fault, and now we're all going to pay the price. I think that in future governments are going to want banks to hold a good deal more by way of capital reserves, and I think they'll enforce it by regulation. For their part the banks will stop selling (or buying) CDOs, and we'll find it harder to get mortgages and loans.

  ngb68 18:43 02 Oct 2008

You really do have a chip on your shoulder about banks don't you?

Again Forum Editor hits the nail on the head. People need to take responsibility for their own actions and it's no good borrowing money then blaming the bank when you run into trouble.

And, as for 'keeping their profits private', banks are (mostly) public listed companies and are required to publish their profits for all to see.

Financial Services is just about the only sector where the UK is still a world leader and, like it or not, it is an extremely important part of the UK economy.

  oresome 18:44 02 Oct 2008

"irresponsible people find they can't make the payments on the money they borrowed"

How exactly would such people have been able to forecast the economic downturn we now find ourselves in?

If the brightest brains who work in finance have come unstuck, what chance for the average Joe?

  ngb68 18:48 02 Oct 2008

Maybe the assets are all in the husband's name. In bankruptcy, you are allowed to keep certain items, eg chattels and tools of your trade. Maybe, she is a horse breeder or trainer? Or told her trustee she was!

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