Anyone else not do credit? And a bit of a rant.
Discussion
When I was an idiot at Uni I got myself into a bad shape. I have since paid it all off and now have a great credit rating. But I don't believe in it. I have a few current accounts, and debit cards for each, I only use one which is Lloyds TSB. Bit worried about how this bank is going to be "split up" as the business I own's bank account is also with Lloyds TSB. It is the only bank I have never had issue with, the rest are quite frankly poop:
HSBC - Mess me around, staff at the cornwall branches are lazy, they won't allow me to withdraw cash over the counter unless "it's an emergency". I don't like carrying all my cards round with me. They don't mind me paying IN over the counter though.
Smile - do "paperless admin" where they don't send you anything. (funnily enough, if you go over the overdraft suddenly they send you letters for repayment) So they keep charging me but don't tell me and the charges build up. The nearest bank is miles away, has no parking near it and I have no time to go there. No idea what my balance is, the internet banking has not worked in over a year. Worried mainly because the Co-Op aka Smile, is supposedly buying Lloyds.
Natwest. Meh. Charging me £15 a month for an overdraft yet I am in credit on the account and don't use the overdraft. The only answer they have is to close the account, but it is handy having one for the future.
Now a lot of people say "you are stupid not to use a credit card, with 0% balance transfers" but I don't see it as stupidity. Especially the business, sales were dire in Jan and if I had a line of credit I would be f
ked! No wonder loads of business' are going down the pan, people seem credited up to their eyeballs.
These same people say it will be impossible to grow a big business without using credit. And that I should be driving a new car etc and to buy it all on personal credit.
Am I right or wrong on the subject?
HSBC - Mess me around, staff at the cornwall branches are lazy, they won't allow me to withdraw cash over the counter unless "it's an emergency". I don't like carrying all my cards round with me. They don't mind me paying IN over the counter though.
Smile - do "paperless admin" where they don't send you anything. (funnily enough, if you go over the overdraft suddenly they send you letters for repayment) So they keep charging me but don't tell me and the charges build up. The nearest bank is miles away, has no parking near it and I have no time to go there. No idea what my balance is, the internet banking has not worked in over a year. Worried mainly because the Co-Op aka Smile, is supposedly buying Lloyds.
Natwest. Meh. Charging me £15 a month for an overdraft yet I am in credit on the account and don't use the overdraft. The only answer they have is to close the account, but it is handy having one for the future.
Now a lot of people say "you are stupid not to use a credit card, with 0% balance transfers" but I don't see it as stupidity. Especially the business, sales were dire in Jan and if I had a line of credit I would be f
ked! No wonder loads of business' are going down the pan, people seem credited up to their eyeballs.These same people say it will be impossible to grow a big business without using credit. And that I should be driving a new car etc and to buy it all on personal credit.
Am I right or wrong on the subject?
Depends on your circumstances.
Plenty of people use a credit card for virtually every purchase, and pay it off in full each month. They're no doubt getting all sorts of benefits while doing so, and quite possibly would think you're daft for not doing the same.
Hell, a T-20 trade is effectively a loan. Yet some people use those to great effect, again and again.
Plenty of people use a credit card for virtually every purchase, and pay it off in full each month. They're no doubt getting all sorts of benefits while doing so, and quite possibly would think you're daft for not doing the same.
Hell, a T-20 trade is effectively a loan. Yet some people use those to great effect, again and again.
Yes, a bit of a rant
It sounds as though you have not chosen a bank, or bank account that services your needs.
Banks do offer more than one type of account, look at the charges (and freebies) associated with each product. I recently had to change two of my accounts because they started to charge me for incoming int wires (the cheek of it)
Credit.
Two ways to look at credit.
With regard to business credit, no business would be able to expand without credit. Cash flow shrinks during expansion because costs rise long before revenues increase. I've always found employees get really pissed off if you don't pay them, so some sort of line of credit is quite useful.
Personal credit does not give any promise of a return in your favour. It may get you a bigger house that may appreciate but until you sell up and buy a tent it will always remain a paper gain. And a possible future tax liability.
Car credit is worse as it is a depreciating asset, even though the salesman may offer you a tremendous deal with low financing, "time" is built in to the price somewhere.
It really depends on how long you want to remain poor
Sensible debt has become a way of life, just make sure you know how much you are paying to service that debt and you should survive. If you can anticipate your future needs it usually works out cheaper. Getting or arranging credit before you need it will get you a better deal than if wait 'til you are in a "crap situation".
Those with variable loans or loans that need to be refinanced could be in for a shock if QE is tapered down. Actually we could all be in a fix anyway because wherever we live you can be sure the local governing body is up to the hilt in debt that is currently on a low rate. If (when) the rates rise the debt service cost will double and they will look to the public to pay up.
Particularly true here in the States, we have lots of State and Municipal debt. Some places more in jeopardy than others, Detroit and California spring to mind.
I suppose we could give Detroit to the Canadians and hope for a really big earthquake that would make California part of Asia. That would save us more than a Trillion
Basically know what you are paying.
You need a house and a car, but a little left over for living is nice.
It sounds as though you have not chosen a bank, or bank account that services your needs.
Banks do offer more than one type of account, look at the charges (and freebies) associated with each product. I recently had to change two of my accounts because they started to charge me for incoming int wires (the cheek of it)
Credit.
Two ways to look at credit.
With regard to business credit, no business would be able to expand without credit. Cash flow shrinks during expansion because costs rise long before revenues increase. I've always found employees get really pissed off if you don't pay them, so some sort of line of credit is quite useful.
Personal credit does not give any promise of a return in your favour. It may get you a bigger house that may appreciate but until you sell up and buy a tent it will always remain a paper gain. And a possible future tax liability.
Car credit is worse as it is a depreciating asset, even though the salesman may offer you a tremendous deal with low financing, "time" is built in to the price somewhere.
It really depends on how long you want to remain poor
Sensible debt has become a way of life, just make sure you know how much you are paying to service that debt and you should survive. If you can anticipate your future needs it usually works out cheaper. Getting or arranging credit before you need it will get you a better deal than if wait 'til you are in a "crap situation".
Those with variable loans or loans that need to be refinanced could be in for a shock if QE is tapered down. Actually we could all be in a fix anyway because wherever we live you can be sure the local governing body is up to the hilt in debt that is currently on a low rate. If (when) the rates rise the debt service cost will double and they will look to the public to pay up.
Particularly true here in the States, we have lots of State and Municipal debt. Some places more in jeopardy than others, Detroit and California spring to mind.
I suppose we could give Detroit to the Canadians and hope for a really big earthquake that would make California part of Asia. That would save us more than a Trillion
Basically know what you are paying.
You need a house and a car, but a little left over for living is nice.
The "I don't do debt" is an admiral stance I suppose, especially when it comes to personal finances, but not mortgages of course, they're different because a few bumps in the road aside you should make money on that.
Of course the main reason why people avoid it, is because it's jolly expensive - but then so is a letting an unused account rack up lots of fees and fines.
But for Business I think it should be considered a great tool for trading.
A big part of the business I work for is selling IT Hardware, we make maybe 5%-10% margin on some of it, we simply couldn't trade without credit, not at a decent level anyway. we'd be able to take on 1, maybe 2 jobs at a time, then spend 4-6 weeks sitting around waiting for our customers to pay before we looked for more work, but the FD is very strict about paying our suppliers as soon as we're paid and only banking our profit margin, where people go wrong is they lose sight of how much of their income is actually theirs and consider OD's, CC's and Supplier Accounts and theirs to spend.
Of course the main reason why people avoid it, is because it's jolly expensive - but then so is a letting an unused account rack up lots of fees and fines.
But for Business I think it should be considered a great tool for trading.
A big part of the business I work for is selling IT Hardware, we make maybe 5%-10% margin on some of it, we simply couldn't trade without credit, not at a decent level anyway. we'd be able to take on 1, maybe 2 jobs at a time, then spend 4-6 weeks sitting around waiting for our customers to pay before we looked for more work, but the FD is very strict about paying our suppliers as soon as we're paid and only banking our profit margin, where people go wrong is they lose sight of how much of their income is actually theirs and consider OD's, CC's and Supplier Accounts and theirs to spend.
Theoretically any debt that brings a greater return than it costs is a good thing. The downside as you rightoy say, is factoring in the risk of a relative increase in the cost of the debt to revenue. Given the fallible nature of forecasts I would only borrow in very small amounts over limited periods. Building a business model around cheap debt is a very risky strategy. Though a very profitable one if it goes righf.
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