Should a cap be put on how much an individual can borrow?
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My credit card company sent me a letter today saying that my credit limit had been increased to 拢11k and that I was pre-approved for an unsecured loan of up to 拢25k. I don't earn huge sums of money, more or less the national average, and if I borrowed on both these I would be in severe financial dire straights. However, I am sure there will be people out there who do max out there cards and get huge loans and end up in all kinds of trouble because of it.
Should there be a limit on how much credit and individual can borrow. Perhaps related pay. For example, no more than 10% of there annual income? Maybe this could be increased with age as people become less prone to impulse buying.
PS Putting mortgages aside as they are a seperate issue
Should a cap be put on how much an individual can borrow?It is the credit card company that is taking the risk and they deserve to lose if they give loans to people who cannot pay them back. The responsibility for this lies of the shoulders of the lender that extends the credit lines, not the person who received it without asking for it.
About 6-7 years ago I received a new Visa credit card account from Next Card. The usual initial credit limit for cards I had been getting was maybe something like $5,000 or so. Not with Next card, they started me off with $14,000 credit limit. A couple of years later I get a notice saying my account has been closed, and after checking I find that regulators had forced next Bank into bankruptcy for handing out excessive credit.
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