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The credit crunch hits home
How the search for credit in the economic downturn became a fool's errand
Markets
The credit crunch hit home this week, and I mean literally hit home – the doormat to be exact.
The letter that came through the door was the most recent of three, all telling me that I can’t get credit.
I suppose it’s a bit daft to decide to sort out your finances at the start of an economic downturn, but my timing – along with my financial capabilities – has never been great.
Feeling quite smug about consolidating my two overused and frankly knackered credit cards and trading them in for a shiny new card with a preferential rate, I filled out the application form provided conveniently by Natwest online about two weeks ago.
Natwest was the first point of call seeing as I do all my banking with them and they’re the ones that had given me the two credit cards in the first place so I figured I’d be head of the queue for another. Wrong.
The first rejection arrived.
Not one to be easily deterred, I applied for a couple more. Stupidly I thought that the lenders would be fighting themselves to supply credit to a girl who only pays off the interest every month and is guaranteed to put more than a couple of pairs of shoes on the card every now and then. Surely I’m their target market?
But so far I have had no joy. I’ll admit to feeling a little flummoxed because I hadn’t actually thought about how the credit crunch would practically affect me. Sure, I write about the credit crunch and I know why it’s happening but it had never really occurred to me that I’d be financially affected. Naïve I know.
But financial naivety is something that plenty of people in their 20s and 30s suffer from. Very few of my peers save into a pension and even fewer know what an annuity is. People I know spend as much as their cards will let them and live always on the wrong side of the overdraft.
A quick straw poll of friends on a Friday night revealed a scary mentality to money.
1. Nobody was the slightest bit worried about the credit crunch and said they had been spending as much as before
2. All agreed that saving was a waste of time seeing as they didn’t have a hope in hell of saving enough money to get on the property ladder.
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2 comments so far. Why not have your say?
Ben Thomas
Jun 19, 2008 at 11:39
It comes as no great surprise that educated young things are financially naive, but I think there is also an added dimension and that is the tendency for younger people to live in denial about ageing. I spent 8 years running my own business consultancy back in the 90s, training the Life Asssurance industry on how to target and effectively approach the market to promote their products - yes those late night calls were all my fault... The interesting thing was that we knew all about the 'Pensions Time-Bomb' in the industry, we knew that young people had no financial savvy, or indeed any interest in having any. As long as there was credit, it was always 'manana'. Well 'manana' has finally arrived and there is no longer any excuse for procrastination. In this information age we all know that we will retire poor, that money doesn't grow on trees any more and that we won't live forever. Maybe the credit crunch is just the wakeup call we all needed to get some sense into our lives...
Ben Thomas - Wilde Pure Search
report thisMichael Hellman
Jun 19, 2008 at 15:49
Refreshingly honest article for someone writing for a financial website. But its nothing knew there have always been people who do not want to educate themselves about money and it shows later in life but by then it is always too late. The governments will get the blame in some cases rightly so but this government has made it easier than any to save, for the average and below average income the tax allowances are great for pension savings and isa savings.
While credit cards and shops exist there will always be people up to their eyeballs in debt after all it helps keeps the economy afloat.....that is until you have to do an IVA or worse and then it is the rest of us who in some way foots the bill.
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