Cyclone Posted February 5, 2009 Share Posted February 5, 2009 in that case, means test it... people like us who are skint, not because of debt, but simply as a result of this 'recession' - should get extra £££, or a chunk of debt wiped off.. (to put our situation in context, we have a mortgage, and thats it... no car, no other loans, my g/f works but is on mat leave (that's only £117 per week), i was made redundant last year, and am struggling to find work... and with a 3 and 1/2 month old baby aswell, its not easy) Benefits are means tested to keep you afloat, what is the advantage of giving out more money than the minimum sufficient? It's not easy being out of work, if it were even more people wouldn't bother to look that hard. Link to comment Share on other sites More sharing options...
Cyclone Posted February 5, 2009 Share Posted February 5, 2009 Well, you'd need a time machine to spend it at Woolworths. During the 70s there was high inflation and I've heard that according to economic theory, people should have spend their money instead of saving it, as it would just lose value sitting in a savings account. But instead they saved more to compensate for the fact that its value was going down. I imagine low interest rates could have a similar effect - you know that the value of your savings won't be as much now, so put a few extra pounds in if you can. If inflation is higher than interest rates then money sat in the bank is actually devaluing. It would be better converted to some easily liquidised asset like gold. But you need a fair bit to make trading in gold worthwhile. Link to comment Share on other sites More sharing options...
Cyclone Posted February 5, 2009 Share Posted February 5, 2009 That is where it doesn't make sense to me. If I save £100 and through a combination of low interest and high inflation it turns out in 1 years time to only be worth (the equivelant of) £90, then i've got £90. If i did what was recomended and had already spent it i'd have £0. If you spent it on gold you'd have £99 worth of gold (£1 in dealers fees). Link to comment Share on other sites More sharing options...
Tradescanthia Posted February 5, 2009 Share Posted February 5, 2009 The rise in credit card interest will only stop people such as myself from using them. I have substantial savings and will simply pay off the balance in full every month thus saving myself money and reducing my losses from the lack of investment return on my savings. I will then be able to invest even more capital. More power to the credit crunch, my mortgage is now a pittance as well. Nice one Gordon Brown, keep up the good work. Link to comment Share on other sites More sharing options...
L00b Posted February 6, 2009 Share Posted February 6, 2009 Surely no one is in the position of having both savings and credit card debt, that just wouldn't be smart. As jeremyjh1 would put it, The problem with your stance is that everything is relative - and subject to change. In some circumstances, there are advantages to have both at the same time, depending on the type of savings and the CC terms & APR. For instance, why buy a [insert good] cash, if you can buy it at 0% APR? You cash makes more babies, because you have not dented your capital for the purchase and (depending on the numbers of course), the monthly repayments for the [insert good] could be out of the interests on the savings = one additional 'self-financing' asset for the household. Up until not so long ago, we saved more by living on CC monthly (putting absolutely everything on it, DDs, council tax...the works - all except drawing cash) and paying it in full at month end, whereby no interest charged, whilst savings were calculated likewise monthly on total savings + joint incomes. Basically, it's the same prinicple as 'One Account' mortgages. Not so much a viable proposition these days, with interests on savings such as they are. Link to comment Share on other sites More sharing options...
Cyclone Posted February 6, 2009 Share Posted February 6, 2009 I suppose it does depend. There are credit card deals, but I don't believe that's what we're talking about when we mention credit card debt (nor would the change in interest rate affect that - which was the situation mentioned in the post I quoted). I suppose you might also have savings where withdrawing would loose more interest than not paying off the credit card debt. How do you put a direct debit on an credit card, isn't the whole point that it is directly debited from your bank account? In the situation you describe (pay off at the month end) you had no credit card debt as the term is usually used. It doesn't mean temporary balances, it means carried balances that you pay interest on. Link to comment Share on other sites More sharing options...
L00b Posted February 6, 2009 Share Posted February 6, 2009 How do you put a direct debit on an credit card, isn't the whole point that it is directly debited from your bank account A CC account is, to all intents and purposes, a bank account. A DD is debited from any account you put the DD against. Re. "credit card debt" Personally, I don't make a distinction between CC debt accruing interests (cc balance not paid or remaining to be paid after month end) or 'free balance' during the month: a CC balance to me is "debt" at any moment in time, whether on the day I charge the card or at month end or thereafter, because it's money I owe to the card issuer from the second I use the card. Might be an oversimplistic point of view, but I find it financially healthy I accept that the issue (concurrent savings & CC debt) changes entirely depending on how "debt" is defined, of course. Indeed, if debt is understood as balance carried forward, it makes no sense not to clear it with capital at the present time. Same rationale applies if we had a mortgage with variable APR, with mortgage repayments going from 750 to 250 (imaginary figures), now is the time I'd be paying as much against the mortgage as possible, to bring down the capital on which the interest is calculated, thereby reducing later repayments as & when interest rate goes back up. Link to comment Share on other sites More sharing options...
Cyclone Posted February 6, 2009 Share Posted February 6, 2009 A temporary balance is debt I agree, but if it's cleared every month then it's not costing anything. If you carry a balance but have savings then it's unlikely to be sensible as the amount earned on the savings are less than the amount you pay for the carried balance. Link to comment Share on other sites More sharing options...
melthebell Posted February 6, 2009 Share Posted February 6, 2009 How would you clear it? Just make it disappear with a magic wand? Have the government pay it back? Why should those in debt get (effectively) free money, whilst those not in debt get nothing but the bill? How would the companies which had lent the money survive, that money didn't grow on trees, ultimately that is someones savings that you're not writing off, or the money from a pension scheme. Unless you wanted the government to pay, which is in effect all of us paying to alleviate other peoples debt. No, I can't see any benefit in this idea. isnt that like the banks getting all the cash, and squandering it in bonuses when theyre the ones getting us into the ****? Link to comment Share on other sites More sharing options...
L00b Posted March 5, 2009 Share Posted March 5, 2009 About as short sighted as printing more money, they could print loads of it and give everyone a bag full Your wish is Melwyn's command Link to comment Share on other sites More sharing options...
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