Painful, life changing decision

[Allen]

I don't really buy that though, mate. See, they don't hold a gun to your head and say - take this card, or accept this new credit rise, or buy shiny things with this credit.

End of the day, you're an adult, its your choice and you are fully aware of the situation. If you choose to have another card, fair enough, just make sure that you are aware of the flip side of the coin.

So I just don't buy the whole 'they reel you in' stuff. You filled the forms in mate.

Congatulations for being able to say no Vaul, I applaud you. But I think you're being a little arrogant if you can't have a little bit of compassion for people who do fall for these "deals" then get drawn into the world of what seams to be never ending debt. And once you're in there, it's hard to get out!

Myself, I first fell for it when getting a hi-fi I think, at the age of 18. OK, I was an adult, and my parents had taught me about money but who was there to tell me about the pitfalls surrounding the massive problem this country has with borrowing? Yes, I had common sense so don't use the "any adult with 3 functioning braincells" arguement, but I may not have had enough wisdom about it to have made the decisions I did make, it was purrely based on what the company told me, and let's face it, they'd tell you anything to get you to borrow money.

In hindsight, I would never have started borrowing when I turned 18, but I did, now I have to deal with it. I'm slowly getting there (after facing bankruptcy a few years ago at the age of 21) but these bills still haunt me, even though I now earn over twice as much as I did when I was 18.

Oh, and visidigi, well done for cutting up your cards mate! It's hard, I know, but it will be worth it!

[Allen]

you have to have a good credit rating in the UK to get places.

to get a good credit rating, first you must have credit.

Use credit to your advantage, and only your advantage.

Use your credit cards for the stuff you always pay for on your cheque or debit card, and then pay it all off monthly.

If you avoid credit your entire life, you'll struggle to get a motgage, and will always end up renting someone elses house, and paying THEIR mortgage and helping them own several houses.

So, no one should be scared of credit.

the trick, as you're all celever enough to know, is to control IT, and not the other way around.

Put it this way:

£1000 sofa's for your home.

Either get 0% finance for a year, and use credit to your full advantage, while sitting on £1000 and gaining a l;ittle good interest for a few cold beers out with friends at Christmas.

or give them all the money and getnothing for it.

OR.....as I do monthly:

Spend EVERYTHING you are buying thast month on your credit card...food, beer, petrol, broadband....etc etc....everry little thing on your plastic.

Keep the interest in your current account that is tied to your mortgage, hence lowering the interest that month.

Pay it off next month afteryou've been paid again.

THEREFORE always having between £400 and £600 of someone elses money payimng interest off your motgage.

Do that for 25 years...and you'll have your house paif off about 3 YEARS EARLIER

Very wise words there, Zak. Seen that before on a financial advise site somethere.

However, this should be taught to all 18 year olds, not just to those who are now in debt!

[shiato storm]

I got given a book for xmas thats actually, how ever camp it is, quite good. its called 'What not to spend' by Alvin Hall (that black money guy with glasses, camp-er than Graham Norton but the advice in the book is worth noting. puts into simple language that even stupid me can understand, makes you want to go read a bit up on things...and also makes you realise how banks love to screw people over!

[Swafe]

Good on ya Matt

Ive never had a credit card, for the mere fact that I dont ever want to get into debt, Im allowed a 3500 quid loan from uni, but have I took it ? Well no not yet, Im tempted to and to put it in a high interest savings account, but it may still be tempting to spend....which I dont want to do

Overdraft is only there if I need it, and its good to know your limits, I only buy things that I would normally do I dont just spend it cos its there and I can, I think thats a good idea anyway

[BroadbandPlacey]

exactly swafe, why use a credit card or get credit when its not neccisery? id rather be totally in the black at all times rather than having some debt here and some savings over there...

[Swafe]

yeah....having credit cards, overdrafts and loans there flying left right and center, its sooo tempting to just go forget it, ill borrow it, build a new pc play with it and i wont have to pay for it for 2 years

shame quite a few ppl think like this, then get in stupid amounts of debt my mates been working since hes 16, working 4 years now and STILL doesnt have a penny to his name, he doesnt even spend that much, but he takes cash out of his overdraft every month, hes now 2 grand in debt cos he took a loan to pay off his overdraft as it was lower interest....then went into his overdraft again

[Ravens Nest]

I have a mortgage and i have had it for the last 3 years, and i do not own a credit card. (and never have or will do)

The only thing i have is my Barclays connect debit card, they kept offering me credit cards and loans.

The last time i had loan's was from Barclays and that was for my first and second PC, which was when i was 18 and then again when i was 20 (10 years ago) so i havent had a loan of any sort since 1990.

So i suppose the reason i was able to get my mortgage with very little hassle was probably because i had borrowed money and paid it all back on time.

[Swafe]

true, but first time buyers have to start somewhere, and not everyone has had a loan in the past

and if you do take a loan, and dont pay it on time, you can kiss your chances of getting a morgage goodbye without some sort of collateral

[ajbrun]

Im allowed a 3500 quid loan from uni, but have I took it ? Well no not yet, Im tempted to and to put it in a high interest savings account, but it may still be tempting to spend....which I dont want to do

If I were you, I'd take the loan and stick it in a high interest account, like I've done. I think you need to pay back interest at the rate of inflation (which I think it about 3%). So long as the bank account gives you more than whatever inflation is, you're gaining!

[Nick F]

I am in my third year of uni and got 3 credit cards, just transfered the first two to my new third one so I can pay it off now I am working. It is really amazing how CC company's give out credit to anyone these days to make some cash.

Did any of you read the story about HSBC making nearly £9000 a second last year?

Disgrace!

[Swafe]

If I were you, I'd take the loan and stick it in a high interest account, like I've done. I think you need to pay back interest at the rate of inflation (which I think it about 3%). So long as the bank account gives you more than whatever inflation is, you're gaining!

but savings arnt that high no more, with low interest rates, i mean even my isa is only about 4.1% iirc, so i wont be making a lot (1%? 30 quid a year?) and if i do have 3 1/2 grand stashed away.....then 7 grand after year 2 itll more and more tempting to spend it....i really would love on of them MR2s!

[MD]

If you relally beleive its the way to go then use these guys, highly recommended... http://www.ingdirect.co.uk/

m@

[BEANFro Elite]

The following policy has always kept me debt-free and stresfree:-

"If i can't afford i can't have it..."


Now if only my sister obeyed this rule...

[Zak33]

I have a mortgage and i have had it for the last 3 years, and i do not own a credit card. (and never have or will do)...

...
...So i suppose the reason i was able to get my mortgage with very little hassle was probably because i had borrowed money and paid it all back on time.

Zakkly. Credit is Credit....no matter if its a car loan, a personal loan or a credit card. Even an overdraft.....same thing. Credit.

And it's recorded. By Equifax and Experian and the banks themselves.

To have good credit is to be good WITH credit.

One exception. I was rejected by a Store Card Company in B&Q for zero reason recently.

I checked with all my banks and the HP companies I knew the week after to make sure I was still clean.

I was:

Likely reason for rejection by store card credit company? They would never make money from me as I pay it all off, every month. But they won't admit that. Simply "I wasn't within their credit scoring range"

ie I dont run up debts so I wasn't worth the admin OR the free £20 voucher that was the SOLE REASON I applied in the first place.

As a young person you NEED to build a credit rating. Mysister did what I tld her andshe now has a nice housewith a sensible mortgage rate . My brother didn't do what I told him and he has to rent as he is not mortgagable

All I tolf them was : Get a Bank loan for £300 and once you've been acceptedf for it (Mum and Dad gauranteeing it) put the money in a Building Scoiety, pay 6 moths of payments WITH INTEREST...you cant avoid it...then take the money from the Building Society and pay therest of the loan off.

You've lost about £30 in interest and admincharges. Sorry.

But its essential. Like a biiig computer game. You have to lose to win.

Then after 6 months apply for a bigger loan, inyour own name, and do the same, but pay it off in 3 months.....make 2 big payments (from the loan itself, safely tucked away)_ make a few monthly payments from salalry then clear it all.

Then get a credit card. Use it for a few hundred pounds, pay it ALL OFF monthly.

Then use itfor small amount (£30 ish) and pay offhalf...leave the other half for the next month...then pay it off totally. Then keep that card but only use it a occassionaly.

Then wait for the torrent of offers for credit.

and always be carefull. Dont get burned.

[Ravens Nest]

Zakkly. Credit is Credit....no matter if its a car loan, a personal loan or a credit card. Even an overdraft.....same thing. Credit.

And it's recorded. By Equifax and Experian and the banks themselves.

To have good credit is to be good WITH credit.

Ah now it all makes sense now, the two loans i had were both 1 year loans for £1,500 which i paid back every month with out fail.

So it must have gave me a very good rating which must have been sent from Barclays bank to Equifax and/or Experian.

One exception. I was rejected by a Store Card Company in B&Q for zero reason recently.

I checked with all my banks and the HP companies I knew the week after to make sure I was still clean.

I was:

Likely reason for rejection by store card credit company? They would never make money from me as I pay it all off, every month. But they won't admit that. Simply "I wasn't within their credit scoring range"

ie I dont run up debts so I wasn't worth the admin OR the free £20 voucher that was the SOLE REASON I applied in the first place.

Well i used to work for B&Q (5 years and 3 months full-time) and the reason would have definetly been that your credit rating was too good.

All the builders & tradesmen that had accounts there owed thousands and the interest rate was astronomical, and i'd never seen any of them clear what they owed, they either paid it and then straight away spent it again on there store card or just added to there Debt.

Not sure whether it's the same now as i havent worked there for over 8 1/2 years.

[Ravens Nest]

Get a Bank loan for £300 and once you've been accepted for it (Mum and Dad guaranteeing it) put the money in a Building Society, pay 6 months of payments WITH INTEREST...you cant avoid it...then take the money from the Building Society and pay the rest of the loan off.

You've lost about £30 in interest and admin charges. Sorry.

But its essential. Like a big computer game. You have to lose to win.

Then after 6 months apply for a bigger loan, inyour own name, and do the same, but pay it off in 3 months.....make 2 big payments (from the loan itself, safely tucked away) make a few monthly payments from salary then clear it all.

Then get a credit card. Use it for a few hundred pounds, pay it ALL OFF monthly.

Then use it for small amount (£30 ish) and pay offhalf...leave the other half for the next month...then pay it off totally. Then keep that card but only use it a occassionaly.

Then wait for the torrent of offers for credit.

and always be carefull. Dont get burned.

Seems like a great plan for those trying to get a good credit rating, the only downers are it will take over a year to get the good credit rating and the money you lose paying the interest.

But it's a small price to pay for been able to put your foot on the property ladder, just wish it wasnt so expensive for people to get a mortgage