Saturday, 25 July 2009

Credit card debtors generously help out the banking sector

The Bank of England may have cut interest rates, reducing funding costs for banks, but you won't see that generosity extended to credit card debt serfs. The spread between LIBOR and credit card interest rates has increased by well over 600 basis points.

It is probably a good thing, hopefully discouraging a further unsustainable increase in household debt. Also, the increased spread presumably increases the profitability of credit cards, and helps banks cover their huge losses speculating on those hopelessly mis-priced asset backed securities. In effect, credit card debtors are providing their very own bank bailout.

Personally, I am grateful to those credit card debtors for this generous assistance to our beleaguered banks. It means less of a burden for taxpayers.


Obsidian said...

Capital One have just ramped up interest on mine.

Luckily I pay mine off in full in every month, so no interest.

The trick with credit cards is to use them, have your wages go into a easy-access, higher-interest account and pay it off in full every month.

Every time I buy something its with money I'm earning interest on. Or rather would be if easy-access interest rates were not so risible at the moment.

Anonymous said...

Thanks also to smokers @£4 a packet for helping out and a special big thankyou to those smokers who also have credit cards.

Anonymous said...

I have a VISA Debit card in order to avoid debt, with Lloyds TSB. However, this does not function as a debit card. The money is actually removed from your account one week later. Rather neatly snaring me in an expensive unauthorised overdraft.
Lloyds TSB's explanation was that the vendor "hadn't got around to" taking the money out... as opposed to the much more believable Lloyds TSB had delayed payment and left the money showing up as balance, a curious kind of unavailable balance, in my account.

Banks are very sneaky devious money thieves. Make sure you come off best.