Credit's Too High To Mention (Credit Cards in general)

Member Name: I Like Blue

Product:	Credit Cards in general
Date:	26/09/01 (234 review reads)
Rating:

Advantages: Good fix to short term problems., An easier way of getting a loan.

Disadvantages: Neverending debt., Temptation to buy things you wouldn't normally., Bank charges for paying monthly payment by cash.

Credit Cards seem so easy to get nowadays because no matter which magazine or papers you pick up a bunch of leaflets fall out. They all come from various banks or lending institutions and the same is true on the Internet, companies tempting you into unnecessary debt.

They all offer pretty much the same thing – a little more financial freedom from whatever debt you are already in, or enticing you to get into debt by making the impossible seem possible. The new car you want, some new furniture, replacing old electrical goods etc, etc. You get the picture.

These companies make getting a credit card sound so easy and straightforward, but it isn’t. There seems to be an uneven balance in the way these companies give out credit cards. Have you ever been left scratching your head wondering why you were turned down for a credit card, when there was no apparent reason to be rejected? Yet you know someone, either a relative or a friend who is up to their neck in debt but still manage to get another credit card or a new higher credit limit? It baffles me too and nobody has ever given me a proper explanation to why this occurs.

2 of the reasons I have often been given are either -

You have to be in debt to get credit (?!?) – which means you have a credit/debt history that can be checked, and no matter how much debt you have, as long as you make the required payments on time, you will always be favourably considered for more credit. This always begs the question, ‘How do you get a credit history to start with?’

It all depends on where you live – this means that your address is checked rather than the applicant, and often a previous owner/tenant may have had a bad credit rating, which then for some strange reason affects every other person who lives at that address thereafter. However this isn't quite correct as this is usually the excuse given by the credit card company but is not in fa
ct how the 2 main Credit Agencies work, so don't always believe the address thing to be true.

The credit cards and the 'offers' themselves don’t seem to be of any benefit to anyone except the company giving you the credit card. The larger the credit limit the more like a loan it is and more tempting to make that purchase you wouldn't have otherwise made. Then the repayments have to be made and this where it starts to get serious. In some cases you could end up paying back double the amount you spent on the card in the first place! The whole credit card business is a minefield and I would strongly suggest you think long and hard before making that move or you could end up with a large credit limit to pay off that you can’t escape from, unless you get another credit card...

...another credit card that tempts you to transfer 'other' credit card balances to the one offered, and usually at an introductory period of a low interest rate.

Initially this begets a feeling of relief and seemingly a new lease of freedom with your finances and then the cycle begins again.

Another thing to note is that often credit limits are raised without the card holders knowledge. Sometimes card holders are informed by a single line or two on their monthly statement stating that from a certain date their new credit limit will be blah blah.

However if the cardholder requests a limit increase they are often turned down or told to wait until the next review. Yes review, it appears, and I have been subjected to this myself on occasions, that some or most credit card companies check (or review) customers accounts every 6 months or so and this is when the decision is often made to raise the limit or not.

Something else I have noticed is that if I want to make a monthly payment by cash then I must do it at my own Bank. I have tried paying at other Banks (Barclays, HSBC and Lloyds) by cash and have oft
en been met with the words "Do you have an account here?" and when I reply "No" I am then told that if I want to pay by cash I will also incur a further GBP5.00 charge for the privilege!

So if you want to pay your monthly credit card payment by cash do it at your own Bank and preferably at your own branch to avoid those extortionate charges.

Now, I have decided that I will save for whatever I need, and earn my own interest by saving the money rather than paying the interest to a faceless organisation who only ever see you as an account number or post code on their computers. This also makes me laugh because a lot of the ‘personal’ approach between 'lender' and prospective credit card holder has gone, and 99% of credit card decisions/applications are made and processed by computers. This method gives no room for flexibility; it is all binary logic and number crunching.

I am not against credit cards, as they can be a good thing and can be really useful. But, they can also lead to a whole life of misery where you exist/work to make the repayments and this is something we should all be aware of when applying for a credit card or requesting a new higher limit. Although I do realise that sometimes these credit card companies raise limits without consulting the credit card holder, so it can appear the extra credit has been 'given' to the customer as a reward.

Finally I will say this, If you are having trouble getting a credit card, the logical thing to do would be to try more companies. But, try to resist the temptation trying a lot of different companies, sending off lots of applications simultaneously. You see what happens is that every application submitted will leave a 'footprint' in the credit agencies' databases, and each 'footprint' has the effect of lowering your credit rating ever so slightly.

As hard as it may seem resist the temptations as
best as possible, and keep your limits within your spending limits. Self-discipline is the key no matter how much you want that new widescreen TV, or latest DVD player or Hi-Fi, or Computer, or new Clothes…

Oh to hell with it "Charge it all to my Visa card dahling!"

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