credit card cheques

My current card provider has never sent me a blank credit card cheque but the other cards I used to have sent them all the time. My first card was as a named user on my wife's account. As a teenager I never wanted or needed a credit card so I didn't apply for one. When I finally needed one I struggled to find a provider who would accept me partly because I lacked a comprehensive credit history and partly because banks were more cautious about opening credit card accounts back then. Once I had a card it was much easier to get an account solely in my own name, then easier to get one with a less prohibitive rate of interest. Maybe if the entry requirements for credit accounts were still as stringent we would not be facing the mountain of personal debt that we as a country are currently experiencing. But I've digressed .. .. ..

The government has launched the Consumer White Paper[pdf] today which has lots of proposals for regulating the credit industry including banning the unsolicited issuing of credit card cheques which is the theme that grabbed the headlines on the BBC. For me though the figures on page 30 of the pdf make scary reading.. .. ..

UK consumers currently owe around £1.4 trillion to banks and other financial institutions. The vast majority of this borrowing is for mortgages on houses. However, £230 billion is consumer credit, which includes personal loans, overdrafts, credit cards, store cards and some other forms of specialist lending.

The amount we all borrow on an unsecured basis has increased dramatically over the past twenty years; in 1993 total consumer credit borrowing was only £70 billion.

I like the way that the borrowing figure is quoted for 1993 and not, for example, 1997. Grant Thornton said

In 1997 and 1998 the point where UK GDP covered UK personal debt fell on tomorrow's date 23 August, the result of individual mortgage and personal debt amounting to £503 billion compared to the GDP of £786 billion and £541 billion compared to GDP of £841 billion respectively. In ten years, the calendar date of this day has increased by some five months. Last year, for personal debt levels in 2007, the date when UK GDP covered all personal debt fell on 5 January 2008, this year it falls on 8 January 2009.

So in ten years of a Labour government personal debt has almost tripled? Fucking hell! To finish, back to the White Paper and this priceless comment on page 32 .. .. ..

Even before the current crisis, the Government was already concerned about the number of people with too much debt. In the early years of this decade we identified an increasing risk of over-indebtedness.