My credit card company sent me a letter today saying that my credit limit had been increased to £11k and that I was pre-approved for an unsecured loan of up to £25k. I don't earn huge sums of money, more or less the national average, and if I borrowed on both these I would be in severe financial dire straights. However, I am sure there will be people out there who do max out there cards and get huge loans and end up in all kinds of trouble because of it.
Should there be a limit on how much credit and individual can borrow. Perhaps related pay. For example, no more than 10% of there annual income? Maybe this could be increased with age as people become less prone to impulse buying.
PS Putting mortgages aside as they are a seperate issue
2007-07-09 00:49:35 · 6 answers · asked by John D 3 in Business & Finance ➔ Personal Finance
It is the credit card company that is taking the risk and they deserve to lose if they give loans to people who cannot pay them back. The responsibility for this lies of the shoulders of the lender that extends the credit lines, not the person who received it without asking for it.
About 6-7 years ago I received a new Visa credit card account from Next Card. The usual initial credit limit for cards I had been getting was maybe something like $5,000 or so. Not with Next card, they started me off with $14,000 credit limit. A couple of years later I get a notice saying my account has been closed, and after checking I find that regulators had forced next Bank into bankruptcy for handing out excessive credit.
If a bank wants to give me a big credit line all on their own it is not MY fault. If they do that long enough they are going right down the proverbial drain.
Now I have over $120,000 total credit limit on my credit cards. I got $15,000 of this in just the past two weeks. Now I am eying the possibility of $250,000, but the thought has occurred to me that perhaps I should make my goal be $1 million. The questionis, how far can one go with this stuff?
This is where the Bigger Fool Theory kicks in. This theory says that a person might be a fool for having so much credit available on credit cards, but the bank that issues them is the Bigger Fool.
2007-07-09 01:02:42 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It's not anyone else's responisbility to save one from one's own stupidity.
Everyone know's, or should know, how much they make, how much they have in the bank and how much in debt they are and to borrow/spend accordingly.
Mortgages can't be a separate issue because you still have to pay them every month and have to be accounted for in your income/outgo calculations.
As to the credit card limit, a vast majority of people pay the minimum due and not the bill in total so that skews your thinking as to only being allowed to borrow a percentage of your salary. And the credit card companies want to keep the payments coming (with interest) for as long as they can. Plus, if you lose your job then they'd have to yank all your cards and call your loans due in full.
People should learn some fiscal responsibility and money management and take personal responsibility for their own money matters.
2007-07-09 09:06:41 · answer #2 · answered by Anonymous · 0⤊ 0⤋
i believe there should be a restriction based on ur income, by creditors allowing ppl to borrow more then have it is just enabling them to go into debt. ppl have to many impulses and not enough will if the money is there they will pay ad think about it later..you would by now creditors would put a limit considering how many ppl maxed their cards and ended up just going to collections and not paying or something. i have a friend who is 20 in college and she was able to get an increase to 30k on her credit card..that is ridiculouse especially since she never talked to anyone just did it using the automated system. so when she gets out of college she will have student loans and 3 credit cards to pay off.
2007-07-09 08:01:53 · answer #3 · answered by Cindy7777 2 · 1⤊ 0⤋
Yes. I completely agree but it would take public legislation to get this put in place. They keep going higher on my husbands credit cards too. Like you we are not foolish enough to max it out but I know some people who would. We have enough credit card limit to pay for our house and two vehicles (but that would be completely stupid considering the rate one all three of those is still less than the credit card rate when all three are combined).
2007-07-09 08:02:48 · answer #4 · answered by hootie 5 · 0⤊ 0⤋
Ultimately, you cannot protect people from themselves.
If they are too silly to realise that you cannot spend more than you earn, that credit card debt is roughly 4 times more expensive than mortgage debt, and there is no such thing as easy money even if they buy 10 lottery tickets a week!
Ill-education is the prime reason we have a growing dicotomoy of the haves and have nots
2007-07-09 08:43:40 · answer #5 · answered by Hasski 2 · 0⤊ 0⤋
In the US, you can contact the credit card company and tell them to cap the limit.
2007-07-09 09:27:27 · answer #6 · answered by jdkilp 7 · 0⤊ 0⤋