Friday 21 October 2016

Time to take the scissors to those not-so-flexible friends

Published 28/12/2006 | 00:11

THE following items are listed on my December credit card bill: Nine Newbridge silver tree decorations ?90; six bottles of champagne ?180; six boxes of luxury chocolates ?72; three perfume gift sets ?147; two children's duvets with fairies waving rhinestone wands ?80 and one glittery tabletop arrangement ?30.

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That's only the tip of the iceberg - I'll spare you the rest. But it's a hefty bill, as I imagine yours is. And precious little on it constitutes necessities - some of it doesn't even count as treats, judging by the amount of receipt-swapping and present-trading among my family on Stephen's Day.

Even as I contemplate meeting this credit card bill, I'm wrestling with the lure of the January sales and their invitation to run to a few more indulgences. Most of us are currently facing payback time - if not today then next week.

Except knowing the bills are mounting is no deterrent to the runaway spending spree that has us by the throat.

Car parks were full in the main shopping centres by 11am yesterday, while customers were spotted emerging from Dublin's Dundrum Shopping Centre shortly after 7am laden with bags. Few of us are proof against 'Prices Slashed' signs.

Especially when the credit card companies are decent enough to make a prominent feature of that inducement-to-spend line on every bill - the one reminding us we only have to repay a minimum amount.

The outstanding debt can be added to next month's total, sure nothing could be simpler.

There's no shortage of people using that option, judging by the level of credit card debt in the country.

It currently stands at ?2.3bn and is rising by 18pc a month. No need for a crystal ball to predict January will nudge those totals upwards as we let ourselves be incited towards the last lap in this year's orgy of splurging. 'Spend now pay later' should be tattooed on our foreheads.

Why are we doing it? We weren't born to spend, we didn't come into the world with our umbilical cords looped around a credit card. But we've been conditioned to reach for the plastic at every opportunity.

It's worth remembering certain groups benefit from encouraging us to spend regardless of whether we can afford it: banks, manufactures and major corporations, for example. Between greed and blanket advertising, we're up to our oxters in debt.

If you bear in mind people borrowing on credit cards pay 20pc interest, with some rates as high as 39pc, you don't need to be George Lee to realise a bargain isn't much of a bargain at those prices.

Does anyone bother any more about the rule of thumb suggesting a bargain should be (a) something you want and (b) something you can afford to deserve its description?

Ironically, people are relying increasingly on their credit cards as higher mortgage repayments and energy bills gobble up the household budget. But spending has become a compulsion with us - during Christmas people were constantly talking about the January sales, planning their excursions to them, speculating on the reductions. I was amazed to overhear someone on a mobile phone call to their boss offer to work Christmas Day in exchange for yesterday off for the sales.

That's the sort of conversation to suddenly make sense of those statistics the economists pump out which generally pass over our heads. You know, figures showing our private sector debt (all debt including mortgages) is two and a half times the average of all other euro-zone countries.

It's bizarre, how we feel compelled to buy such a mountain of material goods. They don't make us happy, although I can't deny there's an adrenalin rush as I hand over my credit card. It doesn't last, though - the buzz had long since dissolved before I bagged and tagged the bottles of bubbly. The sales won't be any different.

Those who can least afford to accumulate debt are just as susceptible to the spending bug as the people who pay off their bills in full every month. There's evidence less well-off and therefore vulnerable groups are borrowing from money-lenders at 180pc repayment rates on average.

NO, that figure's not a misprint. Illegal operators are charging more again.

Some 10,000 people approached the State's confidential Money Advice and Budgeting Service this year. Most were aged 26 to 40 and owed ?6,000 plus.

I've met a few people who fell into difficulties this way and - reluctantly - moved back in with their parents to cut their outgoings and start making inroads on repaying the debt.

But that's not an option for everybody. Someone else I know bundled all his loans together and paid them off with a top-up loan on his mortgage. Not a bad solution - except he went straight back to the Internet poker sites and amassed a new tranche of credit card debt.

The credit card is a useful financial product: most of us rely on it for booking tickets or shopping on-line, and it allows us to avoid carrying cash.

But yesterday as I stood in a shop and watched a heaving mass of consumers surge towards the tills, I couldn't help thinking most of us should take a pair of scissors to our flexible friend.

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