It is, perhaps, the strangest thing about the credit crunch; it does not appear where you most expect it.Take, for example, credit card debt. We are well over a year into the crisis and so far, there has no impact on UK credit card balances. Once we got over the usual Christmas spending binge, credit card debt began to creep upwards.
This is not to deny that there are some very serious problems in our financial system. Rather, it is to point out that the crisis is quite localized. So far, the interbank market and mortgage approvals have been the two largest causalities.
Will the crisis spread? Will we wake up and find that our credit cards no longer work? Will our credit limits suddenly shrink? My head says no, but my heart says maybe.
6 comments:
And yet one of my cards gave me interest-free debt for March-September this year; so for the first time ever, I didn't pay it all off every month. Very mysterious.
Perhaps with 'real world' inflation (as opposed to the 'official' inflation figures), people are finding it hard to pay for things out of their current account and so are (either reluctantly or quite willingly) resorting to use their cards for more and more spending?
Is it perhaps the case that people haven't fully woken up to the fact that living beyond your means and/or living a decadent lifestyle is no longer feasible? Maybe only with unemployment, will reality sink in? I don't say this with any glee or smug satisfaction - it saddens me that so many people have got carried away with materialism and will face a reckoning over the next few years.
Myself? I was stupid but wised up and am now doing anything and everythign to pay down my debts and live within my means. It's not easy, particularly living in London, but I just can't wait to have the burden of personal debt off my back.
PS fantastic blog by the way - you're doing a great service!
I did not know you had a crystal ball Alice! You generated statistics already for next year in the graph. In Aug 2008 the balance was 65 billion.
I think the dates on your graph may be moved ahead by 1 year...
Looking at the graph, its very much flat. I guess this is because:
a) On the whole people cant afford to pay off their balances
b) People arent allowed to add much more.
Credit cards are used by the people that need them most. And in this time of financial need, this isnt going to get better.
Andy
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