Credit cards

Matthew Vincent

Does the general public care about huge levels of unsustainable debt? Not if it’s the government’s, apparently. As my colleagues wrote in this morning’s FT:

Ten leading investment funds all told the FT that a hung Parliament, potentially delaying action to tackle the UK’s £167bn deficit, was the biggest threat to the market… But Sunday’s polls suggest the public does not share market concerns about a hung parliament. In polls by ComRes and YouGov, they said that would be their preferred outcome. More…

Are Britain’s consumers so intoxicated, or numbed, from their 13-year credit binge that they no longer think of debt as a problem? Not so, claimed Sainsbury’s Finance – arguably the ultimate “off-the-shelf” lender – this morning:

Matthew Vincent

Is popular culture to blame for the state of household finances? It occurs to me that today’s indebted thirty-somethings had the misfortune to grow up in the 1980s to a soundtrack of such musically – and economically – dubious classics as ‘Money For Nothing’ by Dire Straits, ‘Gold’ by Spandau Ballet, and ‘Opportunities (Let’s Make Lots of Money)’ by the Pet Shop Boys. They clearly switched off whenever Radio 1′s ‘Oooh’ Gary Davies introduced ‘Money’s Too Tight to Mention’ by Simply Red – but then didn’t we all?

So it’s perhaps little wonder that this generation’s children are now growing up in households with average short-term debt of £8,653, according to Scottish Widows. They’re having to live with it, too – Equifax reports that one third of borrowers are only paying off up to 25 per cent of these credit card debts each month, with nearly one in four making only the minimum repayment.

But the children may grow up to be more financially savvy than their parents – thanks to the music of Tinchy Stryder, the undisputed ‘Prince of Grime’. For those of you unfamiliar with the latest urban sounds, Tinchy recently reached number one, in what Gary used call the Hit Parade, with the self-confidently titled ‘Number One’, featuring N-Dubz. And now, he is giving personal finance lessons in schools.

Lucy Warwick-Ching

I like credit cards. Or should I say, I like what having a credit card allows me to do. I can book a holiday without having to make sure there’s enough money in my bank account. Or treat my family to extra presents at Christmas.

But I also see how easy it is to get into financial difficulties by overspending on these cards. So today’s response by the credit card industry to the government’s consumer white paper is disapointing.

Lucy Warwick-Ching

It’s hard to imagine how Ryanair could make itself less popular, but it has. Last week the no-frills airline changed its ‘free’ option from the popular Visa Electron card to the little-used Master Card prepaid.

The problem isn’t so much that it is charging customers to pay by card – although that is worth a blog all on it’s own. No, this time it’s the fact that after millions of people went to the effort of taking out a Visa Electron card so that they could take advantage of the perk that allowed them to avoid the £5 fee levied per passenger per journey for bookings made with a credit or debit card, Ryanair has now changed the ’free’ option to Master Card.

Lucy Warwick-Ching

Christmas is here again and charity campaigns are working hard to make us part with our money. But it seems they will have to work even harder as total giving by individuals is down 11 percent in 2009, which means we have given £1.3bn less than last year.

But while some people are battening down the hatches and hiding their money under the mattress there are others who do still want to give to charity. Here are twelve ways to make your donations to charity go further:

1. Tick the Gift Aid box – If you’re a UK taxpayer making a donation to charity in the UK, you can add Gift Aid.  This means Her Majesty’s Revenue and Customs will give an extra 28p to the charity for every one pound you donate.  If you’re a higher-rate taxpayer you can also claim the difference between the basic and higher-rates of tax on your donation. 

Lucy Warwick-Ching

We’ve just heard that the judgement on the bank charges test case will be given at 9.45am at the Supreme Court’s  Parliament Square HQ, London, next Wednesday 25 November 2009. So if you’re one of the thousands of individuals to have been charged high fees from your bank watch out for the result of the case on our homepage.

The case has been followed closely after it was revealed that the banks have made an estimated £2bn a year by charging customers hefty fees for unauthorised overdrafts, bounced cheques and direct debits. The major legal challenge is examining whether these are legally “fair”. If the supreme court justices rule against the banks, it could open the door for billions of pounds worth of charges to be paid back.

Lucy Warwick-Ching

Speaking ahead of the release of tomorrow’s national insolvency statistics Deloitte’s Contentious insolvency Group predicts the figures will break through the records again.

Louise Brittain, partner in the group, expects the number of people filing for personal insolvency in Q3 will exceed the 30,000 mark. She says:

This figure is staggering, and unfortunately the end is not in sight. I fully expect that by the year end, 2009 will have broken all personal insolvency records, with the total number of petitions likely to exceed the 130,000 mark.

The types of people filing for insolvency is also expected to change. There will be mix of sole traders and individuals with high credit card debt and also those who have lost or have had to reduce their income and have struggled to make the repayments on their fixed rate mortgages.

Look out for the piece on insolvency tomorrow on Personal Finance.

Lucy Warwick-Ching

Gordon Brown wants to stop companies increasing interest rates on existing debts without telling card holders, issuing unsolicited credit card cheques and relaxing credit limits without being asked.

Speaking in a podcast, released on the 10 Downing Street website and YouTube at the weekend, he said: ‘We are announcing measures to make the credit and store card companies clean up their act to get you a fairer deal.’

Listen to the PM’s podcast here.


The recording comes ahead of Tuesday’s publication (by the consumer affairs minister Kevin Brennan) of the results of a review into credit and store card practices that it has been conducting over the summer. The review will include a proposal forcing an increase to the level of minimum monthly repayments card issuers ask for each month.

Watch out for Matthew Vincent’s story on this subject and what it could mean for you in tomorrow’s FT and on the personal finance website.

Related links:

Unsolicited credit card cheques to be outlawed in white paper plans, FT, July 2, 2009

The FT’s Money blog is a forum for the latest news and insights from the UK’s personal finance scene. Matthew Vincent, the editor of FT Money and his team of reporters will upload their views and insights on what’s happening in the industry and how this affects people’s finances.

This blog is no longer active but it remains open as an archive.

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About our bloggers

Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.

Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.

Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.

Ellen Kelleher has been a personal finance reporter in the UK for close to four years. Before arriving in London, she worked in the FT's New York bureau where she covered the insurance sector.

Steve Lodge is a personal finance reporter on FT Money specialising in savings.

Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for Prior to working at the FT she was a news reporter for the ABC.

Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.

Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.