What credit crunch?

[Daniel]

Well I've had another frustrating day at work talking to morons :mark:

I'm worse than satan! I sell payment protection cover on credit card debt :p

Anyhoo enough of that, basically I speak to about 30 or 40 people each day and mention the cover that we offer which would cover them if they were ever to come out of employment through unemployment, sickness, accident etc etc. Amazingly almost nobody seems to think that they're ever going to lose their job (wtf?) and have difficulties making payments and when you manage to convince them that it is possible for them to lose their job the standard response seems to be "well if I lose my job I'll just have to get another job, I can't afford to not be working!" at which point they say "no I don't need that cover" :confused: These people just seem to totally ignore the fact that every day people are losing what were once safe jobs and people who just a few years ago who would have been headhunted for their mad skillz are finding it difficult to find employment.

Now I understand perfectly well that payment protection isn't for everyone and some people are actually in jobs where it would just be an expense for nothing and that it's optional and people don't need to take it but why do people have such a casual attitude to having rather large balances which when the turd hits the fan they can't afford to pay back and will more than likely default on if they lose their job.

The nicest feeling I've EVER had at work was when I had a guy who was practically sobbing after losing his job a few months ago and asking to go through to someone to talk about reducing his payments and being able to tell him that he had payment protection in place and there was nothing to worry about and that we actually OWED him money because he'd made a couple of payments while he'd been unemployed :)

Am I alone in thinking the statements I mentioned above are just a tad illogical? :mark:

[airshifter]

Am I alone in thinking the statements I mentioned
above are just a tad illogical? :mark:

No, I'm sure the people you work with also feel that everyone should have added protection on their credit accounts! :laugh:

My wife worked in credit card collections for years. From her experience there it seems to me that most card users fall into two categories. First those that just use a card for convenience. They don't care about such insurance as they tend to not run their balances up, and in the case they do they still have the money to cover paying it quickly.

The others are the ones that live on credit which should have never been extended to them in such large amounts. They really don't care about insurance for the most part, since they are charging things they couldn't afford to begin with. Since they are living above their means a portion of them will go bankrupt, many others will deal with collections people and finally struggle through, and a few will see the light and stop their bad credit card habits.

But you might have a hard job in front of you. People know you can't live on insurance for long, so a lot of people won't bother with it, especially when things are tighter than usual on the economic side.

[race_director]

actually i have been hit by the credit crunch from March to May 09. i use to work for Barclays. ended one morning with job.

But lucky had some reserve to go through the tide. now presently working in another British Bank back here.

The credit crunch was more or so die to the carelessness of banker ( including me) , the banker's never ever thought in the wildest dream that the bubble would bust one day. Back in old day i,e money was given to anyone who just needed it, without using brains.

well it will take some time to get out of this mess. 3-4 years. but as usual humans never learn from past


Anyway the history will repeat it self. soon we can see another crisis in another 10-15yrs. when hopefully we all will be safe

[Malbec]

Amazingly almost nobody seems to think that they're ever going to lose their job (wtf?) and have difficulties making payments

How old were they? Under 30? If so they've never been through a recession so they won't know what its like not to be able to get a job because there isn't anything out there. I hope the older guys who know better have a different attitude.... or perhaps I'm being optimistic?

[Jag_Warrior]

Not to knock your industry, Daniel, but I've seldom seen that these plans make good financial sense... considering the cost, I mean.

The best financial advice is to put (and keep) roughly six months of total living expenses in a savings account/emergency fund. For people who don't/can't do that, they're probably living above their means anyway. And if that's the case, they're probably making minimum payments on the card(s). So the cost of the PPI is being added back on a balance (where the principal is barely being touched, as is) and accumulating additional interest charges.

Maybe these plans are OK for some people. And maybe the ones in the UK are different from the ones I've heard about here. But generally speaking, insuring unsecured debt isn't what I would do either. But like I said, there's no "one size fits all" rule.

[Tazio]

I'll sell my offspring before I get into "the red"!

[Hondo]

Daniel, are you one of those annoying b@stards that pester me with undesired sales pitches on the telephone?

[Daniel]

Fiero :p The very same :p

Are you one of those annoying b@stards that are rude to people on the phone for no particular reason other than the fact that they work for a credit card company ;) My tip is just to listen and politely say no. You may even find it's something that is useful for you.

Jag Warrior, it's certainly not a one size fits all sort of thing by any means and I don't think I'd ever take it out myself but I don't ever see myself running up any decent amount of debt.

[Daniel]

JW. Your idea of saving is a good one but the problem with that is that you're paying interest when you could just be paying stuff off.

[Hondo]

I don't use credit cards and am not in debt. I view an unsolicited sales call to my house as an uninvited invasion that does not require me to be polite. You invited yourself.

[Daniel]

Ooh fiero, sorry. We only sell to people who call us. I feel the same as you about unsolicited calls. Apologies for the confusion.

[GridGirl]

I suppose it all depends on how you choose to use a credit card as to whether protection is necessary. I have a nectar credit card which I use to buy fuel and gain extra nectar points. I can afford to pay my entire bill off each month even if I forget to submit my expense claims so I dont see the need to any type of credit card protection. The trouble develops when people use a credit card as a short term loan in effect and run up high balances. Unless your playing the game and taking advantage of 0% deals using a credit card is probably more expensive than taking out a short term unsecured loan.

I think some people are wary of protection plans when you hear stories such as the protection plan would not pay out for ill health becuase you went to the doctors with back ache in 1995 for example. I know thats a little extreme but they hardly ask you to provide a full medical history when your sold these things.

Slightly off topic but I got the hard sell to take out a courtesy car plan when renewing my car insurance. The guy just wouldnt give up when I told him I was insured on other cars and I had no need for a courtesy car if I had an accident. In the end I just had to ask him what is problem was because if the worse came to the worse I really do have no objection to using public transport or even walking.

[Mark]

You can buy insurance for everything these days. But if you took out extended cover and payment protection on every single thing you had, you wouldn't have any money left!

[Bezza]

I agree with Mark. Insurance costs money, which in a credit crunch defeats the object. Shall I insure my insurance?? No. I'll take the risk. I am currently in a job, relatively secure and looking for another job at the same time because I know I can better myself and am very ambitious :) so I have no need to worry

[Mark]

My main problem is that being on a fixed term contract, the most likely time I'm going to lose my job is when my contract expires. For insurance that counts as 'expected' so I can't get cover for that. Even though they'll take my premiums.

Similiarly with Karen being self-employed.

[leopard]

Sometimes when taking a look at the interest of the bill, I want to pay out all of my debt, and never want to use it anymore.

It was no sooner settled up than in the next weekend is used for new transactions. :)

[Daniel]

My main problem is that being on a fixed term contract, the most likely time I'm going to lose my job is when my contract expires. For insurance that counts as 'expected' so I can't get cover for that. Even though they'll take my premiums.

Similiarly with Karen being self-employed.

Well Karen will be able to get insurance to cover herself. The only stipulation with self employed people is usually that they can prove that their business is unable to pay its business debt.

GridGirl, I think you'd be a clot to take out payment protection when you pay your balance off each month. If I'm honest about things I'd say about 60-70% of the people I speak to are just taking advantage of 0% on balance transfers which we do for anything from 6-16 months and who will probably never pay more than the minimum payments off and will probably end up owing more at the end of the interest free period because they're stupid and still buy stuff and then pay interest on it for however long they keep their balance transfer on :mark:

[Hondo]

I understand Daniel, and I'm not impolite to the calls I get from my expressing an interest in a product or service.

[Daniel]

I understand Daniel, and I'm not impolite to the calls I get from my expressing an interest in a product or service.
Sorry for suggesting otherwise though :) That's why the internet is a stupid place to have a discussion :mark:

[schmenke]

If I were ever to find myself in a situation where I had to consider insurance on debt, I'd seriously rethink my spending habits before purchasing the insurance :mark: .

As a general rule, the wife and I try never to accumulate a total credit card debt greater than what we can't repay in a couple of months' time.

The only debt insurance that we subscribe to is the manditory home mortgage loan insurance.

[Hondo]

The problem with extended warranty and other protection programs is the way many of them function.

You sign up with Fiero's extended warranty for 3 years for say $1000.00. If you read the tedious pages of coverage and pay careful attention to the wording, you may realize the warranty doesn't cover much if the problem wasn't caused by some very specific chain of events. But you want the package and Fiero is going to finance that for you so the actual out of pocket costs to you over 3 years will be $1500.00. Doesn't matter, it's only $40.00 something a month and you'll be laughing when that AC unit fails in the summer. That summer your AC goes out, you take the car to the repair shop. Final bill...$2200.00! No problem, you call Fiero for warranty coverage only to find out, per the contract text, that AC repairs are covered only if a Tse-Tse fly gets into the system, drinks the refrigerant, and dies in the expansion valve. "Sorry, we can't help you with this one, but look forward to serving you in the future!" OR you have a great warranty BUT

3 days after you signed the contract with Fiero, he sold your note to Fiero's Holding Company for $500.00 cash. Unfortunately Fiero's Warranties went bankrupt 9 months after you bought your warranty so you have no coverage anymore. However, you still have to pay out the promissary note owned by Fiero Holding Company because that became a separate transaction when your note was sold.

I don't fool with any of them. I knew a guy back in the day that bought a used Dodge Daytona Turbo and also bought the extended service contract. About a year later the turbo failed and the warranty company refused to cover the replacement because he couldn't prove that since new, the car had it's oil and filter changes done at the proper intervals using an oil approved for turbo use. Bummer.

[Jag_Warrior]

JW. Your idea of saving is a good one but the problem with that is that you're paying interest when you could just be paying stuff off.

No, not at all. Ideally, you should use a card to your advantage, using it (only) for the things that you'd otherwise pay cash for. Then when the bill arrives in 30 days or so, you pay it off. In that way, you're actually making money (because of the time value of money). My mother is one of the best I've seen at doing this. She'll buy something as slight as a candy bar on her credit card. But she always pays the card off every month. She uses the bank's money for 30 days and racks up a crazy amount of annual reward points. The bank thinks that she's a good customer. No, she's a horrible customer! The only thing they get from her methods is the transaction fees on the merchants. They better hope that her evil, profiteering ways never catch on. :D

The emergency fund is for things that you probably can't pay off, but that would be necessary in your life: home mortgage (secured debt), car loan (secured debt), food, utilities, etc. Whether ones unsecured debt is paid off or not, the mortgage still has to be paid and food still has to be bought, in the case of unemployment or disability. The purpose of the emergency fund is about survival. The bank can only get a judgment (in the U.S.) on unsecured debt. They can't take your house or car. Absolute worst case, you end up declaring bankruptcy and have bad credit for 7 years or so.

[Jag_Warrior]

The problem with extended warranty and other protection programs is the way many of them function.

You sign up with Fiero's extended warranty for 3 years for say $1000.00. If you read the tedious pages of coverage and pay careful attention to the wording, you may realize the warranty doesn't cover much if the problem wasn't caused by some very specific chain of events. But you want the package and Fiero is going to finance that for you so the actual out of pocket costs to you over 3 years will be $1500.00. Doesn't matter, it's only $40.00 something a month and you'll be laughing when that AC unit fails in the summer. That summer your AC goes out, you take the car to the repair shop. Final bill...$2200.00! No problem, you call Fiero for warranty coverage only to find out, per the contract text, that AC repairs are covered only if a Tse-Tse fly gets into the system, drinks the refrigerant, and dies in the expansion valve. "Sorry, we can't help you with this one, but look forward to serving you in the future!" OR you have a great warranty BUT

3 days after you signed the contract with Fiero, he sold your note to Fiero's Holding Company for $500.00 cash. Unfortunately Fiero's Warranties went bankrupt 9 months after you bought your warranty so you have no coverage anymore. However, you still have to pay out the promissary note owned by Fiero Holding Company because that became a separate transaction when your note was sold.

I don't fool with any of them. I knew a guy back in the day that bought a used Dodge Daytona Turbo and also bought the extended service contract. About a year later the turbo failed and the warranty company refused to cover the replacement because he couldn't prove that since new, the car had it's oil and filter changes done at the proper intervals using an oil approved for turbo use. Bummer.

Good example. The U.S. is being ravaged right now by a couple of extended warranty companies doing robo calls in the lower 48 (I realize that Daniel doesn't do this). The mistake they made is they called Senator Mark Warner and offered him some sort of goofy warranty. Now congress is looking to clamp down on all of them. They recently called my mother's neighbor, told him that the original warranty on his car was about to expire and offered him an extended warranty on his car. Problem is... he's never owned a car in his life!

Whether they'll fix your car or appliance or not (and you're right: in many cases they will not... or they make you jump through hoops), the cost of the policy often doesn't make good financial sense.

[Daniel]

Extended warranty is a crock of :p I'd much rather put the money in the bank.

[Hondo]

Some dealers try to make it sound like buying an extended warranty is a condition of buying a used car from them if they want the dealer to finance the car. Most of these people have credit problems and are afraid to argue the point.

Lol...ever the rebel, when I bought my 3 acres of land and we were going through the final paperwork we hit "title search". This has always been a sore point with me. Real estate is the only business I know of where it's considered the buyer's responsibility to prove that the seller has a clear title to the property and can legally sell it. I told them I wasn't paying for a title search. After being bombarded with all the standard arguments, I again declined the search and informed them if there was a problem with the title I'd pursue criminal charges for fraud against them. The day before the closing, they called and gave me the final numbers and told me to bring a certified check. When I asked why not a personal check, I was told it wasn't their policy. What? I'm going to load 3 acres of land in my trunk and leave town after giving them a bad check for it? Ok ok.

Going over the numbers at closing, by the way they had done a title search to protect themselves but had not charged me for it, an error was found in the calculations and had overcharged me by $600. They wrote me a firm check for the amount owed but I told them It had to be a certified check. "But this is a firm check! it's good!" Not to me it wasn't. They had to send somebody out to the bank, cash the company check, and return with a certified check for me.

I still don't get Christmas cards from those people.

If fewer people played the games, there would be fewer games.

[Mark]

I don't fool with any of them. I knew a guy back in the day that bought a used Dodge Daytona Turbo and also bought the extended service contract. About a year later the turbo failed and the warranty company refused to cover the replacement because he couldn't prove that since new, the car had it's oil and filter changes done at the proper intervals using an oil approved for turbo use. Bummer.

That's perfectly normal. All cars with warranties require that you get it serviced at defined intervals using genuine parts.

[Daniel]

No, not at all. Ideally, you should use a card to your advantage, using it (only) for the things that you'd otherwise pay cash for. Then when the bill arrives in 30 days or so, you pay it off. In that way, you're actually making money (because of the time value of money). My mother is one of the best I've seen at doing this. She'll buy something as slight as a candy bar on her credit card. But she always pays the card off every month. She uses the bank's money for 30 days and racks up a crazy amount of annual reward points. The bank thinks that she's a good customer. No, she's a horrible customer! The only thing they get from her methods is the transaction fees on the merchants. They better hope that her evil, profiteering ways never catch on. :D

The emergency fund is for things that you probably can't pay off, but that would be necessary in your life: home mortgage (secured debt), car loan (secured debt), food, utilities, etc. Whether ones unsecured debt is paid off or not, the mortgage still has to be paid and food still has to be bought, in the case of unemployment or disability. The purpose of the emergency fund is about survival. The bank can only get a judgment (in the U.S.) on unsecured debt. They can't take your house or car. Absolute worst case, you end up declaring bankruptcy and have bad credit for 7 years or so.

Your mum (should I say mom?) is a great customer. Sure the bank don't make much money off her but compare here to someone who takes out £6k credit and then doesn't pay it back. Banks will take customers like your mother any day of the week over people who run up big bills and just don't pay. Those debts then get sold off to recovery agencies who will only pay the bank a fraction of the actual debt.

Again I was slightly on the wrong page compared to someone as well :p Quite often I get people who are paying high rates of interest yet say they've got funds in the bank to clear the whole balance if need be :mark: If you've got the money sitting there why pay interest :dozey:

I also wouldn't talk about bankruptcy in such a matter of fact way :) Before the credit crunch hit I used to speak to people in another job and found a lot of people with less serious credit issues than bankruptcy were finding it hard to get a mortgage. I doubt any bank will want to touch anyone with bankruptcy on their credit report for at least a few more years.

[Mark]

Again I was slightly on the wrong page compared to someone as well :p Quite often I get people who are paying high rates of interest yet say they've got funds in the bank to clear the whole balance if need be :mark: If you've got the money sitting there why pay interest :dozey:
.

They've often talked about that on the TV. If you have credit card debts, and an amount of money in the bank. Use the money to pay off the debts! You'll save a fortune as interest paid on debts is always much higher than that paid on savings.

Sometimes it's worth having a credit card that you pay off immediately. I do a lot of miles so fuel is a major expense, so I've got a Shell credit card which gives me 3p off per litre, that together with my loyalty card means I effectively paid 97.4p per litre for diesel today instead of 100.9p which itself was already the cheapest around.

[GridGirl]

You can get diesel for 100.9p ooop norf before a discount? I paid more than that for petrol last night. :( Ah well, my nectar points will be clocking up nicely. :)

[Mark]

You can get diesel for 100.9p ooop norf before a discount? I paid more than that for petrol last night. :( Ah well, my nectar points will be clocking up nicely. :)

The price was 100.9 for petrol too!

I don't think it will last long because the Shell garage in York is the cheapest around. Even the supermarkets are charging more like 102.9.

How much are nectar points worth? About half a pence each I think?

PS. Asda Killingbeck has petrol for 99.9. I've no doubt you'll know where that is :p

[GridGirl]

I paid 102.9 at Tesco last night.

I think nectar points may be worth difference amounts depending on where you spend them. Although 20,000 which I'm almost up to will get me £100 at Argos which is 0.5p each. That Shell card does sound quite good though..might have to look into getting one if they are still doing the same deal with 3p off fuel.

[Daniel]

The price was 100.9 for petrol too!

I don't think it will last long because the Shell garage in York is the cheapest around. Even the supermarkets are charging more like 102.9.

How much are nectar points worth? About half a pence each I think?

PS. Asda Killingbeck has petrol for 99.9. I've no doubt you'll know where that is :p
Nectar points are worth practically nothing :p We've got 11,000 of them though :p

[Mark]

I paid 102.9 at Tesco last night.

I think nectar points may be worth difference amounts depending on where you spend them. Although 20,000 which I'm almost up to will get me £100 at Argos which is 0.5p each. That Shell card does sound quite good though..might have to look into getting one if they are still doing the same deal with 3p off fuel.

I don't think they are doing it any more now! But it's worth trying.

[Jag_Warrior]

Your mum (should I say mom?) is a great customer. Sure the bank don't make much money off her but compare here to someone who takes out £6k credit and then doesn't pay it back. Banks will take customers like your mother any day of the week over people who run up big bills and just don't pay. Those debts then get sold off to recovery agencies who will only pay the bank a fraction of the actual debt.

Again I was slightly on the wrong page compared to someone as well :p Quite often I get people who are paying high rates of interest yet say they've got funds in the bank to clear the whole balance if need be :mark: If you've got the money sitting there why pay interest :dozey:

I also wouldn't talk about bankruptcy in such a matter of fact way :) Before the credit crunch hit I used to speak to people in another job and found a lot of people with less serious credit issues than bankruptcy were finding it hard to get a mortgage. I doubt any bank will want to touch anyone with bankruptcy on their credit report for at least a few more years.

In the U.S., a personal bankruptcy stays on your credit report for seven years. The same is true of a foreclosure or a car repossession. At roughly 3-4 years, it is possible to get a mortgage, though it will be a subprime. With a FICO score less than 725 or so right now, you probably won't get the best rate for a home mortgage, car loan or a credit card.

Other than job loss, the number one thing that drives Americans into bankruptcy is medical bills. But a friend of mine lost her job late last year when her bank went under. A few months ago, the repo man snagged the M3 that I'd gone with her to pick out just a couple of years ago. She can't find a banking job anywhere in Charlotte. Her spirits are still up, so she's joked that her next career might involve swinging from a pole and wrestling in jello in her bikini. She's now having trouble making the payments on her condo... and with the soft market, she can't sell it. Her 401K, that was deep into 6 figures, is now in the low 5 figure range, because she had a lot of the bank's stock in it. So other than cashing it in and getting raped by Uncle Sam with penalties and taxes, she only has what was in her personal stock portfolio and savings. She wasn't really living above her means. But when the meltdown hit, especially in her industry, it really hit. She was a high earner who lived well, but also saved her money. It's just that when the job went away and some of her investment choices went south, she got pulled under.

All that to say, with the car repo and the possible foreclosure upcoming, bankruptcy isn't going to hurt her credit anymore than it has been, or will be. American Express, Saks, Mastercard and whatever other cards she has ain't gettin' paid. Those are unsecured debts, and all they can do is call her on the phone every 10 minutes and eventually get a judgment against her. She needs to keep the condo and she has to eat. As she said the other day, "they can squeeze my little turnip all they want, but there's no more blood left to give."

True, some people got in way over their heads with over mortgaged homes and excessive credit cards. But some other people just got caught by the tide. It's not that I'm matter of fact about bankruptcy. But it should be used by consumers as necessary. There's no reason for people to feel shame if that's what they have to do. I've had tenants declare bankruptcy and stiff me on unpaid rent. I didn't like it. I wasn't happy about it. But hey, that's how the game works. You pays your money and you takes your chances.