bank says using credit card doesn't involve debt - misselling?

[Harry Davis]

I don't use a credit card, and whenever I have cause to speak to anyone at
my bank, Lloyds, they try to encourage me to get one and use it instead of
my debit card.

As you can imagine, repeated advertising in my face of something I don't
want, gets annoying.

Today I told the young man who was trying to sell a credit card that I do
not want one because I never get into debt.

He replied that someone who uses a credit card doesn't get into debt if
they "pay it off".

Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.

I've noticed that there's a widespread belief among younger people that
you're not in debt unless the debt collectors are banging on your door or a
creditor has taken you to court.

I wonder which companies might have spread this idea round, eh?

So would there be any mileage in taping this kind of 'advice' from banks
and causing a scandal, does anyone think?

[fred]

Post by Harry Davis
I don't use a credit card, and whenever I have cause to speak to anyone at
my bank, Lloyds, they try to encourage me to get one and use it instead of
my debit card.
As you can imagine, repeated advertising in my face of something I don't
want, gets annoying.

Next time you're in, ask them to tick the, "no more stupid b'ldy
questions" box on your account prefs which I believe can be done at
Lloyds.

[therustyone]

Post by fred

Post by Harry Davis
my bank, Lloyds, they try to encourage me to get one and use it instead of
my debit card.
As you can imagine, repeated advertising in my face of something I don't
want, gets annoying.

Next time you're in, ask them to tick the, "no more stupid b'ldy
questions" box on your account prefs which I believe can be done at
Lloyds.
--
fred
it's a ba-na-na . . . .

On the last renewal of my Lloyds credit card they persuaded me that
"payment protection insurance", costing 1% on top of turnover, was a
good idea. So now I use it even less, using a debit card instead,
except for travel. Probably a good deal for them, or is it just
another scam?


rusty

[Roger Mills]

Post by therustyone
On the last renewal of my Lloyds credit card they persuaded me that
"payment protection insurance", costing 1% on top of turnover, was a
good idea. So now I use it even less, using a debit card instead,
except for travel. Probably a good deal for them, or is it just
another scam?

PPI is often a scam. Lots of people who couldn't possibly have benefited
from it, but were mis-sold it, have received compensation.

The banks would probably rather you used your credit card (if one of
theirs) rather than your debit card - because they get a bigger fee from
the merchants and can use the credit balance in your current account to
their (but not your!) benefit.

[Alan]

In message

Post by therustyone
On the last renewal of my Lloyds credit card they persuaded me that
"payment protection insurance", costing 1% on top of turnover, was a
good idea.

Unlikely to be a good idea - too many get clauses

Employment: You may have to be in the same job for at least 40 years in
an industry with zero redundancies in the past.

Health: No family history of a similar problems and exclude common
health problems of older age..

While the above may be a slight exaggeration you will have had to read
the small print very carefully and have had to declared ANYTHING
relevant to future claims.

The biggest gotcha maybe that the protection only pays off the minimum
amount on the card. The "insurance" will pay the 5% minimum payment
amount each month but the CC company will add the interest of, say, 20%
to the remainder. The debt increase even if you don't use the card
again.

It's win, win - but only for the CC company.

[Mark]

On Fri, 10 Feb 2012 12:06:05 +0000 (UTC), Harry Davis

Post by Harry Davis
I don't use a credit card, and whenever I have cause to speak to anyone at
my bank, Lloyds, they try to encourage me to get one and use it instead of
my debit card.
As you can imagine, repeated advertising in my face of something I don't
want, gets annoying.

+1

However, having a credit card can be useful as there can be legal
protections as a result of using it.

Post by Harry Davis
Today I told the young man who was trying to sell a credit card that I do
not want one because I never get into debt.
He replied that someone who uses a credit card doesn't get into debt if
they "pay it off".
Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.

True. You borrow the money for a short time. But there is a
difference between "safe" and "unsafe" debt. If you afford to pay
back the amount and can afford the cost of borrowing you don't need to
worry.

Post by Harry Davis
I've noticed that there's a widespread belief among younger people that
you're not in debt unless the debt collectors are banging on your door or a
creditor has taken you to court.
I wonder which companies might have spread this idea round, eh?

Because they make a lot of money from debt.

Post by Harry Davis
So would there be any mileage in taping this kind of 'advice' from banks
and causing a scandal, does anyone think?

Borrowing small amounts of money on 0% interest and paying back
quickly is about the safest kind of debt there is.

[Tiddy Ogg]

On Fri, 10 Feb 2012 13:21:21 +0000, Mark

Post by Mark
Borrowing small amounts of money on 0% interest and paying back
quickly is about the safest kind of debt there is.

True, if you've the discipline to do so. For many it's the start of
the slippery slope.
It's all too easy to fail to pay it off in full.

[Windmill]

Post by Tiddy Ogg
On Fri, 10 Feb 2012 13:21:21 +0000, Mark

Post by Mark
Borrowing small amounts of money on 0% interest and paying back
quickly is about the safest kind of debt there is.

True, if you've the discipline to do so. For many it's the start of
the slippery slope.
It's all too easy to fail to pay it off in full.

Especially if the world changes......

[Ian Jackson]

Post by Mark
On Fri, 10 Feb 2012 12:06:05 +0000 (UTC), Harry Davis

Post by Harry Davis
Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.

True. You borrow the money for a short time. But there is a
difference between "safe" and "unsafe" debt. If you afford to pay
back the amount and can afford the cost of borrowing you don't need to
worry.

How do you see paying by cheque?

If you pay someone by cheque, it will not be paid into a bank
immediately. That may have to wait until the next time the payee is near
a bank. And even once the cheque is paid in, it may take several days
until it gets cleared. Only then will money be debited from your
account. So, essentially, all this time you have been enjoying an
unofficial loan.

Of course, there is one difference between the 'loan' you get when
paying by cheque and when paying by credit card. You can pay by credit
card even when you don't have sufficient money in your bank account to
cover the payment. [Whether you later go on to pay off the full amount
by the due date is up to you.]

When paying by cheque, I believe it is a criminal offence if you don't
at the time have enough money in your account - even if you know you
will have enough by the time the cheque is cleared.

[Mark]

On Sat, 11 Feb 2012 11:18:23 +0000, Ian Jackson

Post by Ian Jackson

Post by Mark
On Fri, 10 Feb 2012 12:06:05 +0000 (UTC), Harry Davis

Post by Harry Davis
Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.

True. You borrow the money for a short time. But there is a
difference between "safe" and "unsafe" debt. If you afford to pay
back the amount and can afford the cost of borrowing you don't need to
worry.

How do you see paying by cheque?

Apart from a pain? ;-)

Post by Ian Jackson
If you pay someone by cheque, it will not be paid into a bank
immediately. That may have to wait until the next time the payee is near
a bank. And even once the cheque is paid in, it may take several days
until it gets cleared. Only then will money be debited from your
account. So, essentially, all this time you have been enjoying an
unofficial loan.

I don't think so. No actual money has changed hands until the cheque
is cashed. With credit cards money does pass to the retailer
immediately. I think of cheques more like different payment terms.

I doubt you'd get the protection of the CCA using a cheque.

[Chris Blunt]

On Sat, 11 Feb 2012 11:18:23 +0000, Ian Jackson

Post by Ian Jackson
If you pay someone by cheque, it will not be paid into a bank
immediately. That may have to wait until the next time the payee is near
a bank. And even once the cheque is paid in, it may take several days
until it gets cleared. Only then will money be debited from your
account. So, essentially, all this time you have been enjoying an
unofficial loan.

It could be paid immediately. A cheque is an instruction to your bank
to pay someone a specified amount of money. You could theoretically
walk into their bank and have the money paid to you there and then in
cash.

Chris

[Roger Mills]

Post by Harry Davis
I don't use a credit card, and whenever I have cause to speak to anyone at
my bank, Lloyds, they try to encourage me to get one and use it instead of
my debit card.
As you can imagine, repeated advertising in my face of something I don't
want, gets annoying.
Today I told the young man who was trying to sell a credit card that I do
not want one because I never get into debt.
He replied that someone who uses a credit card doesn't get into debt if
they "pay it off".
Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.

Well, technically of course you are borrowing the money from when you
buy something until you pay the CC bill so, in that sense, you are right
and you are incurring debt.

However, I think most people's definition of "getting into debt" would
include something about incurring debts which they cannot afford to pay off.

I use credit cards for most of my purchases, both for convenience and
for the protection which it gives for some transactions. I *never*[1]
withdraw cash on a CC and always pay each bill in full by direct debit.
I never buy anything with a CC for which I couldn't afford to pay cash.
I certainly don't consider that I'm getting into debt.

[1] With one exception - and that's getting money from my Halifax card
when abroad, because there are no transaction fees and the small amount
of interest which I have to pay is less than other cards' transaction fees.

[Harry Davis]

Post by Roger Mills

Post by Harry Davis
I don't use a credit card, and whenever I have cause to speak to
anyone at my bank, Lloyds, they try to encourage me to get one and
use it instead of my debit card.
As you can imagine, repeated advertising in my face of something I
don't want, gets annoying.
Today I told the young man who was trying to sell a credit card that
I do not want one because I never get into debt.
He replied that someone who uses a credit card doesn't get into debt
if they "pay it off".
Surely this is misselling? EVERY use of a credit card involves
getting a LOAN.

Well, technically of course you are borrowing the money from when you
buy something until you pay the CC bill so, in that sense, you are
right and you are incurring debt.
However, I think most people's definition of "getting into debt" would
include something about incurring debts which they cannot afford to pay off.

I am beginning to think that perhaps this is how most people think
nowadays. In Britain, that is.

My wife heard someone on the radio say they had a mortgage for 25 years but
have only recently got into debt!

Post by Roger Mills
I use credit cards for most of my purchases, both for convenience and
for the protection which it gives for some transactions. I *never*[1]
withdraw cash on a CC and always pay each bill in full by direct debit.

So you take out a loan to buy food, and then at the end of the month when
sufficient money is in your account, you pay off the debt? If so, how is
this more convenient than using a debit card to pay from actual positive
funds, assuming you have these in your account before the end of the month?

Post by Roger Mills
I never buy anything with a CC for which I couldn't afford to
pay cash. I certainly don't consider that I'm getting into debt.

[Roger Mills]

Post by Harry Davis

Post by Roger Mills
I use credit cards for most of my purchases, both for convenience and
for the protection which it gives for some transactions. I *never*[1]
withdraw cash on a CC and always pay each bill in full by direct debit.

So you take out a loan to buy food, and then at the end of the month when
sufficient money is in your account, you pay off the debt? If so, how is
this more convenient than using a debit card to pay from actual positive
funds, assuming you have these in your account before the end of the month?

We don't actually use it for food - my wife uses a debit card! But we
could. I use it for things like fuel, clothes, internet purchases, etc.
It is convenient because I only have to make sure once a month that
there's enough money in my bank account to pay the DD. With a debit
card, the money comes out straight away so you need to monitor it
constantly.

The other advantage which you ignored is the protection whereby, for
purchases over £100, the credit card company is jointly liable with the
supplier. So, if a supplier goes broke after you have paid for but not
received something, you can get your money back from the credit card
company. This does *not* apply if you use a debit card.

A lot of people won't have credit cards for fear of being tempted to use
them to buy things they can't afford or - worst still - to borrow cash.
I can understand that. Maybe you are like that? The important thing is
always to be the master of the card, never its slave!

[RobertL]

Post by Roger Mills
The other advantage which you ignored is the protection whereby, for
purchases over £100, the credit card company is jointly liable with the
supplier. So, if a supplier goes broke after you have paid for but not
received something, you can get your money back from the credit card
company. This does *not* apply if you use a debit card.

Many debit cards (liek Nationwide for exampel) appear to offer the
same protection as a CC but I recently discovered that for a disputed
CC debit it is the payees' bank that decides whether to pay the money
back or not. I present the case to the nationwide and they present it
to the other rbank who decide whether to pay back the money.

Is it different with a CC? Who makes the chargeback decision? I'd
prefer it to be my bank.

Robert

[Mark]

On Wed, 15 Feb 2012 06:06:10 -0800 (PST), RobertL

Post by RobertL

Post by Roger Mills
The other advantage which you ignored is the protection whereby, for
purchases over £100, the credit card company is jointly liable with the
supplier. So, if a supplier goes broke after you have paid for but not
received something, you can get your money back from the credit card
company. This does *not* apply if you use a debit card.

Many debit cards (liek Nationwide for exampel) appear to offer the
same protection as a CC but I recently discovered that for a disputed
CC debit it is the payees' bank that decides whether to pay the money
back or not. I present the case to the nationwide and they present it
to the other rbank who decide whether to pay back the money.
Is it different with a CC? Who makes the chargeback decision? I'd
prefer it to be my bank.

A genuine credit card has the advantage of the provisions of the CCA.
This can make the credit card company "jointly liable" under law.

Chargebacks can seem similar but they are at the discretion of the
card company and can only be carried out for a limited amount of time
after the transaction.

[Simon Finnigan]

Post by Harry Davis

Post by Roger Mills

Post by Harry Davis
I don't use a credit card, and whenever I have cause to speak to
anyone at my bank, Lloyds, they try to encourage me to get one and
use it instead of my debit card.
As you can imagine, repeated advertising in my face of something I
don't want, gets annoying.
Today I told the young man who was trying to sell a credit card that
I do not want one because I never get into debt.
He replied that someone who uses a credit card doesn't get into debt
if they "pay it off".
Surely this is misselling? EVERY use of a credit card involves
getting a LOAN.

Well, technically of course you are borrowing the money from when you
buy something until you pay the CC bill so, in that sense, you are
right and you are incurring debt.
However, I think most people's definition of "getting into debt" would
include something about incurring debts which they cannot afford to pay off.

I am beginning to think that perhaps this is how most people think
nowadays. In Britain, that is.
My wife heard someone on the radio say they had a mortgage for 25 years but
have only recently got into debt!

Post by Roger Mills
I use credit cards for most of my purchases, both for convenience and
for the protection which it gives for some transactions. I *never*[1]
withdraw cash on a CC and always pay each bill in full by direct debit.

So you take out a loan to buy food, and then at the end of the month when
sufficient money is in your account, you pay off the debt? If so, how is
this more convenient than using a debit card to pay from actual positive
funds, assuming you have these in your account before the end of the month?

You get the cash back from the credit card transactions. I pay for emerging
on a credit card, and move the money into a separate account to pay the
bill off at the last possible moment. I have an offset mortgage, so doing
this reduces the average debt by between £1000 and £3000, depending on what
I spend in a month, as it keeps the money in my hands for as much as two
months longer than using a debit card. It's less effort than keeping an eye
on what my current account balance is, saves me interest on my mortgage and
gives me cash back.

[Moles]

In article <***@88.198.244.100>, ***@is.invalid
says...

Post by Harry Davis
I don't use a credit card, and whenever I have cause to speak to anyone at
my bank, Lloyds, they try to encourage me to get one and use it instead of
my debit card.
As you can imagine, repeated advertising in my face of something I don't
want, gets annoying.
Today I told the young man who was trying to sell a credit card that I do
not want one because I never get into debt.
He replied that someone who uses a credit card doesn't get into debt if
they "pay it off".
Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.
I've noticed that there's a widespread belief among younger people that
you're not in debt unless the debt collectors are banging on your door or a
creditor has taken you to court.
I wonder which companies might have spread this idea round, eh?
So would there be any mileage in taping this kind of 'advice' from banks
and causing a scandal, does anyone think?

But a credit card is actually something that can be used to your
advantage and you only really get in to debt if you do not pay the bill
off completely at the end of the month.

Yes, you could say that it is a loan but if you take that view then the
energy companies are, for example, making you a loan as are the phone
company and anyone else you pay in arrears for their services.

Personally, I put all my month spending on my credit card. I get 1% cash
back on all my spending and extra legal protection on any purchase I
made over £100. I keep my money in a savings account earning interest
and only put the money into my non-interest current account on the day I
pay the bill off.

I do not use a debit card because I would not get cash back and would
not have any legal protection but more so, because I would always need
to be sure that there was enough money rotting away in my current
account to cover my spends.

So unless you feel you cannot trust yourself with a credit card, in
which case do not even consider applying for one, they are a convenient
and beneficial way of managing money.

[Flop]

Post by Harry Davis
I don't use a credit card, and whenever I have cause to speak to anyone at
my bank, Lloyds, they try to encourage me to get one and use it instead of
my debit card.
As you can imagine, repeated advertising in my face of something I don't
want, gets annoying.
Today I told the young man who was trying to sell a credit card that I do
not want one because I never get into debt.
He replied that someone who uses a credit card doesn't get into debt if
they "pay it off".
Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.
I've noticed that there's a widespread belief among younger people that
you're not in debt unless the debt collectors are banging on your door or a
creditor has taken you to court.
I wonder which companies might have spread this idea round, eh?
So would there be any mileage in taping this kind of 'advice' from banks
and causing a scandal, does anyone think?

Two [rhetorical] points about debit/credit cards:

a) Why do credit card companies not allow you to have a positive balance
on cards?

b) Why do these companies not explain the difference in costs charged
for the two cards. For a credit card it is 1-2% ( £10-£20 for £1000).

For debit cards it is 20-25p. (But with limited protection.)

Local businesses are reluctant to accept credit cards but fear that
asking a customer for a debit card will give an impression of mistrust.

Pity

Flop

[Alan]

Post by Flop
a) Why do credit card companies not allow you to have a positive
balance on cards?

I used to have a credit card that paid (a good) rate of interest on
positive balances - the card was taken over by Abbey and all the good
things about it disappeared. (The card had my photo and signature
embedded in a lower layer of the plastic)

However, do you actually have a credit transaction if you have a
positive balance in your account? For instance, if you load the account
with £150 up front do you have the legal buying protection if you then
buy a £150 item with the card?

Post by Flop
b) Why do these companies not explain the difference in costs charged
for the two cards. For a credit card it is 1-2% ( £10-£20 for £1000).
For debit cards it is 20-25p. (But with limited protection.)

It cost me zero to use a debit card. It cost me zero to use a credit
card (I pay the bill in full each month). I get cash back when using a
credit card.

If you, as a customer, are being charged to use a debit card you have
the wrong bank account.

Post by Flop
Local businesses are reluctant to accept credit cards

That's why the likes of Tesco need to compete more at local level!
Customers don't owe a shop keeper a living - the shop needs to provide a
service that the customer wants. If one of these services is payment by
card that's what they need to provide.

Post by Flop
but fear that asking a customer for a debit card will give an
impression of mistrust.

If a company doesn't want to accept credit cards than just put up a
notice saying so. The customer than has the choice of not using the
shop. There are still a few organisations around that appear to be
successful but don't accept credit cards (Aldi/Lidl have this business
model).

[David Woolley]

Post by Flop
a) Why do credit card companies not allow you to have a positive balance
on cards?

They do or did. I think in the very early days they didn't. I've not
investigated the current situation, but at one time one was sometimes
advised to preload a credit card account when going on holiday.

I presume there would be no financial protection for any credit balances.

Post by Flop
b) Why do these companies not explain the difference in costs charged
for the two cards. For a credit card it is 1-2% ( £10-£20 for £1000).
For debit cards it is 20-25p. (But with limited protection.)

I am sure the owners of businesses are aware of the difference. For
consumers, there may be self interest reasons. I think the 1-2% only
applies to low risk businesses. I suspect that many consumers don't
realise it costs money to bank cheques, or cash, as well.

Post by Flop
Local businesses are reluctant to accept credit cards but fear that
asking a customer for a debit card will give an impression of mistrust.

They are in a market. The credit card companies only exist because
retailers are prepared to pay that level of commission for someone else
to take on the potential debt risk, and, at least historically, to avoid
the costs of handling cash.

To really minimise payment costs, they should be encouraging the use of
BACS/Faster Payments payments.

[Ian Jackson]

Post by Flop

Post by Harry Davis
I don't use a credit card, and whenever I have cause to speak to anyone at
my bank, Lloyds, they try to encourage me to get one and use it instead of
my debit card.
As you can imagine, repeated advertising in my face of something I don't
want, gets annoying.
Today I told the young man who was trying to sell a credit card that I do
not want one because I never get into debt.
He replied that someone who uses a credit card doesn't get into debt if
they "pay it off".
Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.
I've noticed that there's a widespread belief among younger people that
you're not in debt unless the debt collectors are banging on your door or a
creditor has taken you to court.
I wonder which companies might have spread this idea round, eh?
So would there be any mileage in taping this kind of 'advice' from banks
and causing a scandal, does anyone think?

a) Why do credit card companies not allow you to have a positive
balance on cards?

I wasn't aware that they didn't.

I'm pretty sure that you can pay the CC company any amount you want to.
Most people pay exactly what is owed at the statement state (and pay no
interest), or pay less and do get charged interest. But I'm pretty sure
that there is no reason why you can't overpay. I doubt if they will send
the excess back to you. All that will happen is that you'll have less to
pay next month.

Post by Flop
b) Why do these companies not explain the difference in costs charged
for the two cards. For a credit card it is 1-2% ( £10-£20 for £1000).
For debit cards it is 20-25p. (But with limited protection.)

The difference is because the CC provides a loan of typically up to 50
days, and someone has to pay for this. And of course, sometimes the
seller passes this on to the payer, who must pay a surcharge for using
CC. With the DC, there is no loan, hence only a small nominal charge on
the seller for using the bank's services (a lot cheaper than for
cheques, I believe). [Don't ask me why some sellers ask for similar
surcharges for CC and DC.]

Post by Flop
Local businesses are reluctant to accept credit cards but fear that
asking a customer for a debit card will give an impression of mistrust.

It's up to them to price their wares so that they can recover their
overheads - which will range from the cost or providing toilet paper for
their employees to what the banks charge them for using their banking
services. Of course, where appropriate, only the CC provides additional
guarantees for the product being bought, and maybe they are reluctant to
be landed with this obligation.

Post by Flop
Pity

If they accept plastic, I rarely find that businesses won't accept both
CC and DC (although I expect that they prefer the latter). Surprisingly,
people like builders, garden maintenance firms and the like often still
only take cheques. I guess that the best non-CC way of paying them would
be to get their bank details, and pay them online using BACS.
[Presumably this can be done without involving either party in any
security risks because, if you give someone a cheque, your bank account
number and sort code are printed on the cheque.]

[Roger Mills]

Post by Ian Jackson

Post by Flop
a) Why do credit card companies not allow you to have a positive
balance on cards?

I wasn't aware that they didn't.
I'm pretty sure that you can pay the CC company any amount you want to.
Most people pay exactly what is owed at the statement state (and pay no
interest), or pay less and do get charged interest. But I'm pretty sure
that there is no reason why you can't overpay. I doubt if they will send
the excess back to you. All that will happen is that you'll have less to
pay next month.

Egg Money had used to do this and, at one time, even paid interest on
credit balances. But they stopped doing this, and now don't exist at all.

The T&Cs for my Halifax CC explicitly forbid credit balances, and say
that if you create one they will immediately refund it. Pity - because
it would be useful to pre-load it for overseas cash withdrawals so as to
avoid paying any interest.

[Ian Jackson]

Post by Roger Mills

Post by Ian Jackson

Post by Flop
a) Why do credit card companies not allow you to have a positive
balance on cards?

I wasn't aware that they didn't.
I'm pretty sure that you can pay the CC company any amount you want to.
Most people pay exactly what is owed at the statement state (and pay no
interest), or pay less and do get charged interest. But I'm pretty sure
that there is no reason why you can't overpay. I doubt if they will send
the excess back to you. All that will happen is that you'll have less to
pay next month.

Egg Money had used to do this and, at one time, even paid interest on
credit balances. But they stopped doing this, and now don't exist at all.

When trying to pay my Barclaycard online, their computer threw a bit of
a wobbly just as the transaction was being confirmed. It ended up taking
my the payment twice.

I didn't seem to get anywhere useful when I talked to someone on their
helpline, so I enlisted help at my local branch of Barclays. The
resident financial advisor eventually got through to someone who
actually understood what had happened. However, I'm pretty sure that,
initially, they still couldn't see why I didn't just leave things as
they were, with me having paid something like £1200 twice instead of
once - with the second £1200 simply being an advance payment on next
month's bill.

Post by Roger Mills
The T&Cs for my Halifax CC explicitly forbid credit balances, and say
that if you create one they will immediately refund it. Pity - because
it would be useful to pre-load it for overseas cash withdrawals so as
to avoid paying any interest.

I got a Halifax CC last year, and (of course) I haven't really read the
Ts&Cs. Your info is duly noted. BTW, these days, both CCs get paid
automatically online by DD.

[Roger Mills]

Post by Ian Jackson
I got a Halifax CC last year, and (of course) I haven't really read the
Ts&Cs. Your info is duly noted. BTW, these days, both CCs get paid
automatically online by DD.

Yes, so do I. But ideally, if you use the Halifax card for getting cash
overseas, it's as well to pay it off ASAP without waiting for the DD to
kick in.

[Mark Goodge]

Post by Flop
a) Why do credit card companies not allow you to have a positive balance
on cards?

Because they're not deposit-holding institutions, and if you had a positive
balance on a credit card and the card company happened to go bust then you
would lose it all - there would be no backup guarantee by either the
regulator or the government. They are, therefore, prohibited by the terms
of their licence from being borrowers as well as lenders. So, while some
credit card operators are more willing to ignore small positive balances
than others, they are all technically obliged to forbid them.

Post by Flop
b) Why do these companies not explain the difference in costs charged
for the two cards. For a credit card it is 1-2% ( £10-£20 for £1000).
For debit cards it is 20-25p. (But with limited protection.)

The reason that they're different it because, although they appear similar
to users, behind the scenes they operate completely differently. A debit
card is simply an interface into an existing bank account, which is paid
for in other ways. A credit card is an interface into a standalone credit
account, which is paid for solely by use of the card and interest charged
on the debt. But yes, the companies could do a better job of explaining
that to their customers.

Mark

[Alan]

Post by Mark Goodge
But yes, the companies could do a better job of explaining
that to their customers.

Customers are not stupid! 99,999% know the difference between a credit
and debit card.

If more people know that charges incurred by shops then there would be
more demand for a minimum 5% discount for a cash or debit card payment.

[Mark Goodge]

Post by Alan

Post by Mark Goodge
But yes, the companies could do a better job of explaining
that to their customers.

Customers are not stupid! 99,999% know the difference between a credit
and debit card.
If more people know that charges incurred by shops then there would be
more demand for a minimum 5% discount for a cash or debit card payment.

It costs most shops more to handle cash than it does to handle credit
cards.

Cash and cards have opposite economies of scale. For small traders, cash is
nearly free to handle, particularly if you disregard the time taken to bank
it - all it costs is a transaction fee for depositing it. Credit cards, on
the other hand, can cost small traders anything up to 5% per transaction.

For large traders those are reversed. The more cash you take, the more
expensive it becomes to handle - not only the time taken to manage it, but
security costs and losses due to staff fraud increase exponentially. But
the more card payments you take, the lower the transaction fee becomes.

That's one of the reasons why supermarkets are so keen to offer cashback on
debit card purchases. It's effectively a way of getting their customers to
do their cash handling for them - every cashback transaction reduces the
amount of physical cash which has to be counted, secured and transported.

Mark

[Roger Mills]

Post by Alan
If more people know that charges incurred by shops then there would be
more demand for a minimum 5% discount for a cash or debit card payment.

Mind you, some companies - particularly travel agents - charge you a
surcharge if you pay by CC - often higher than the costs incurred by them.

[t***@isbd.co.uk]

Post by Flop
a) Why do credit card companies not allow you to have a positive balance
on cards?

They do, I quite regularly slightly overpay my credit card bill and
the positive balance stays there until next time around.

[js.b1]

Post by Harry Davis
Surely this is misselling? EVERY use of a credit card involves getting a
LOAN.

A credit card is a Credit Agreement.
There is an interest free period (4-6 weeks).

Post by Harry Davis
I've noticed that there's a widespread belief among younger people that
you're not in debt unless the debt collectors are banging on your door or a
creditor has taken you to court.

They have been engineered into debt deliberately by finance &
government.
- Debt was used to replace earnings.
- Corporations refused to invest, they wanted to spend on their own
lifestyles.
- Average 1993 graduate £12.8k, 2012 graduate £11.5k and £35,000 debt.
- The top graduates in 2012 will only earn £5,100 more than they did
in 1993.

Education was fudged like credit, in 1990 the independent school crowd
(ISIS) boasted that the new A-level would mean a student would get 2
grades higher in every subject than in 1989. By 1998 it is 3 grades
higher and by 2010 it is simply hilarious. It was "give everyone a
degree (debt)" just as it was "give everyone a credit card even if
they do not have a pulse".


The bad side of plastic.
Cash & Cheque society has been eliminated - replaced by plastic. I
intensely dislike plastic because a) plastic makes people spend more
than cash and b) credit cards make people spend more than a debit
card. Worse, we have multiple credit cards - quite literally £2k/yr
disposable income against £24k credit card debt.
Even worse for the investor is we have low interest rates (reserve
cash has negative real rates) AND everything is no longer priced as
the Cash Price, but a higher Credit Price. The removal of this higher
Credit Price was stark in 2008 when many consumer items simply lost
40% overnight (as did cars, most losing 15% instantly as "just finance
it more on credit because I want it now and who cares").

The good side of credit cards.
- Most allow a credit limit of £500, quite a few allow £100.
- All give Consumer Protection for ALL of any item costing OVER £100
(not 10 items at £10), even if the card is only used to pay for PART
of that item. Eg, pay £100 of a £5700 car on credit card and you are
protected for the lot.
- They are useful in an emergency.
- They are useful for special bargains, Cash Price

What many do not realise is what shattering poverty future generations
will have.
59% of USA graduates earn LESS than required to pay rent + education +
food + car and are LIKELY to continue to do so for over a decade due
to chronic oversupply. There is NO 1998-2003 bailout like there was
for 1990-1996 graduates. It is going to shatter the future of Western
Economies relying on up-selling products and services. USA education
debt is bigger than credit card debt, and UK education debt is like
giving everyone in Africa a degree and thinking you create Germany
overnight. It is pure evil, when the universities burn it will not be
surprising although the fact they tool Roll Calls in 1995 for people
on courses pretty much says it all - open debtor prisons to bailout
decades of financially incompetent socialist scum. A university should
not care if someone just turns up for the syllabus, buggers off to
work in the town/city for 3-4yrs or even starts a business and turns
up to sit the exams and gets a 2i.

[js.b1]

To add, cash back is very profitable for those who can use credit
cards carefully.
You are receiving £25-100-150/yr for no investment of cash in a world
of 3% interest rates (pretty much negative).

However the real trick with credit cards was through 2000-2005 where
0% balance transfers and 0% fees meant you could merry-go-round
multiple credit cards and invest the money in something secure making
5%. It was quite possible to run up £45,000 credit card debt and earn
4.5% on the proceeds if you had the cashflow to keep the min payments
happy.


With BAC still in trouble, MBNA part of BAC, and Capital One etc not
in good health there is the real possibility we see a wind back of
credit cards to "traditional full service banks". That in turn would
see a wind back of fees, £12 or £25/yr as the norm (which it used to
be... October I think for NatWest Access). That in turn may see credit
card limits return to sensible £500-1200 levels, £2300 when you had a
history of investments, cash deposit etc with the bank.

With decline in living standards being deliberately shifted to future
generations, so as to avoid the voting hit in the short term, the
credit card industry is going to be hounding anyone who can offset
their bad debt portfolios.

They handed cards out like toffee, but use them carefully in the
2000-2005 period and you could make £1000-10,000 profit out of thin
air investing at 0% transfer & 0% fee. I think the government actually
blocked the 0% fee? Gosh, that must have been why they expensed the
duck houses...