A Starling credit card could replace my Barclaycard once the free FX period ends on that. But nothing can get me to close my Amex with the exceptional customer service and rewards points
This is exactly what Iâm waiting for. Amex is my primary card for Aviosâ and flight vouchers but i need a backup when a place doesnât accept Amex - so far itâs been a barclayscard as well, though I do not like their app.
Iâm hoping Starling will invent something new, perhaps linked with its borrowing Spaces and integrated with their current setup. Iâm not just in the market for a new card purely because itâs issued by Starling. Having said that, it would be nice to see my net worth (or something approaching it, as Starling doesnât have my mortgage) in the app, Iâd switch for that.
Iâm v keen on this. I think this is more of a Monzo/Dozens play than a Starling one, but itâs a big attraction for me.
On credit cards, Iâd love a Fintech to do something a bit more radical. Tighter integration with the current account, a line of credit split across different products (overdraft, loans, card etc), or something unique that I havenât thought of that makes us all go âyeah, whyâs that not been done beforeâ.
Not sure how easy it is to report one line of credit split between different products. How do Starling report a loan and overdraft combo (as they used to be the same line of credit IIRC)?
What do you mean by âreportâ?
I have a ÂŁ10k credit card and a ÂŁ5000 loan. I use ÂŁ600 on my CC and itâs reported to Experian as a credit utilisation of 6%
What I donât want is for a bank to offer me a ÂŁ20k credit line which I take as a ÂŁ5k loan, 10k credit card and 5k overdraft and then itâs suddenly at 25% utilisation even if I donât use my active credit facilities
How do Starling manage it currently with their overdraft-loan hybrids?
Ah this is where we differ. Iâm not here for credit reference agencies, especially when they stand in the of innovation.
Iâm with Peter, create something people like and use enough and the credit agencies will adapt to you, donât let them keep you in a box, man
Thatâs all good and well until you actually need to apply for some credit and your reported utilisation is at 70% and lenders say no
Itâs hard to break the status quo and Iâm not sacrificing convenience for something that may or may not change things in the future
âŚsince Intelligent Finance did it 20 years ago.
Did they do more than just offset savings?
I should probably say my emphasis is on the bit in bold. Donât get too hung up on the potential example in the middle!
Well it was pretty radical because you could also offset debt (the other way round). Admittedly you paid more tax when you earned interest at the same % as your borrowing, but it was possible.
if.com pretty much invented Pots, too.
When it comes to credit the whole idea of it is to give the user some money now and they pay it back at a later date. When it comes to preapproved loans itâs been done with credit cards because back in the day it was the easiest way to give the user instant access to it and let them choose whether to use it when making a payment (depending on which card they pay with).
Nowadays with tech evolving, credit cards feel like an anachronism being kept alive by various vested interests that make money of the status-quo, often at the expense of the less financially-savvy who donât know how to play the system and make it work to their advantage.
If the point of credit is to give me money, why not just have it in the form of an overdraft (but with reasonable interest rates)? It has all the advantages of a credit card, with the extra benefits of being able to use the money for anything (including things that arenât typically payable using a card like rent or certain bills) and being simpler to manage because there isnât a separate account or balance to keep track of, the balance of your current account immediately tells you how much debt you owe and every incoming payment automatically repays as much of that debt as possible while giving the user the option to keep using credit by just overdrawing the account again.
Maybe Iâm stupid and missing something obvious, but besides the fact that credit cards have certain features (cashback, promotional interest-free periods, etc) and overdrafts have often predatory pricing (which tends to hit those who arenât in a position to open a credit card to take advantage of lower interests and are also the more likely to stay in debt for a long time, thus paying more interest overall) that benefit everyone involved in keeping things as-is, is there any other reason why this isnât done? It isnât a tech problem anymore, the tech is there for a long time now.
Credit and charge cards most certainly arenât just a predatory product to punish the less financially savvy. In fact, youâre supposed to pay them off each month rather than use them to carry a balance (unless itâs a specialist card with 0% interest)
Credit cards have a variety of use cases you canât cover with an overdraft: I put work expenses on so Iâm not paying out of pocket. By the time the payment is due, Iâm already reimbursed by my employer and might have even earned a bit of interest while costing me nothing
If I go travelling I can use my credit card for hotel and car rental deposits and again, Iâm not out of pocket for thousands of pounds while I wait for the money to be released - the bankâs got it for me
If I make a big purchase I can defer payment by a couple of weeks until my next salary is in to help soften the blow. Iâm also covered by S75 of the Consumer Credit Act which doesnât apply to overdrafts
Also, if somethingâs wrong with my order/purchase, I havenât actually paid with my own money yet giving me some leeway to get the issue sorted/get a refund and I will only have to pay weeks later when itâs all sorted
None of the above would be possible with an overdraft as youâd first have to use up all your money in your account before accessing it. And youâd be charged daily
Credit cards are a tool for the financially savvy, often used by the less financially fortunate and/or educated to get themselves in a downward spiral of debt
Nicely put - the key beingâŚ
R-
Totally agree. Iâm a bit obsessed with efficient processes and paying for purchases twice (first by credit card, then paying your CC with your debit card/direct debit) just doesnât seem sensible if youâre not looking to borrow the money anyway.
That said I have a credit card mostly to use for annoying deposits/holds but I also put various other things on it every month âcheatingâ my budget. I pay my bill in full and itâs fine, but better ways should exist whether youâre looking to borrow or not.
You are effectively describing an offset mortgage which is particularly suitable for those with lots of assets.
However, there are many advantages to credit cards which donât come with overdrafts - not least interest free periods and Section 75 protection - and the majority of credit card users would be worse off under your proposal.
There are also good reasons why firms donât want certain bills on credit cards including the fact that it will make things worse for those who have difficult managing their finances.
Agree with all of the above. Credit cards are extremely flexible products which do a number of different things. I canât see a bank routinely not charging for borrowing for nearly two months on any other product?
How else do I separate 0% borrowing over a period of 27 months from my day to day outgoings? Combining two disparate methods of money management like those would be really confusing.
Credit cards are much more than simple âborrow money then pay it back, and repeatâ
Credit card companies wouldnât be profitable if they just gave interest-free loans for a month and everyone was using them like they were âsupposed toâ. Their whole business model is based on people actually carrying a balance past the interest-free period. This system works well right now because it allows people in bad situations (who canât pay off their balance) to give the credit card companies some profit and subsidize the service for those who know how to âplayâ the system.
Iâm also covered by S75 of the Consumer Credit Act which doesnât apply to overdrafts
True, but this seems like something that could (and should) be changed. When a merchant scams you it shouldnât matter whether you paid them with credit or debit, the law should have your back no matter what.
And youâd be charged daily
Which again comes back to my idea of reasonable interest rates for overdrafts. Just because the current pricing model is predatory doesnât mean that it has to be that way. Ultimately whether itâs an overdraft, a loan or a credit card, the underlying concept doesnât change, youâre borrowing money from someone for a certain period of time.
True, but just because some people know how to take advantage of the current system doesnât change the fact that the system itself is flawed and can be made more fair for everyone.
It can be a UI feature in your banking app, but overall I guess I should ask whether you actually need to? I think it would be a lot better to pay off any borrowing as soon as possible. In fact 0% borrowing only exists because there are other people that pay way more than 0% and subsidize your usage. In a fair system this wouldnât exist, and thus there would be no point of keeping a loan for longer than you need to.