It’s all go-go-go in UK credit card market where just about everything is available to just about anyone that wants it. You can get 0% balance transfers for nearly two years and interest free purchases for a year and a half. You can get an APR of less than 7% if your credit is squeaky clean. And if your credit is dreadful, you can still get a card from companies with funny names like Vanquis, Granite and Aqua. Sure, these are bad cards for people with bad credit, and you could pay 40% interest, but you can still have a credit card.
That certainly isn’t the case in Ireland. We all know that things aren’t the way they used to be, but to say things are quiet in the Irish credit card market would be a massive understatement. The last time anything noticeable happened was around seven months ago when AIB increased interest rates on all their cards. At the same time, EBS stopped issuing cards altogether, and in August last year Tesco shortened their balance transfer offer from ten months to six. And that’s pretty much it. A year’s worth of activity in the Irish credit card market and none of it was any good for Irish punters. Even the best rate in Ireland is double that of the UK. You can practically hear the wind whistling as the tumbleweed rolls by.
With so little going on, it’s hard not to conclude that credit card issuers in Ireland just aren’t interested in new business. And we all know it, so we're grimly hanging on to the credit cards we already have.
Back in January 2009 some banks were a little late to notice that the party was over, and that month we peaked with highest number of personal credit cards ever at 2,224,000. A phenomenal number when you consider that we have population of just over four million people. At the same time our personal credit card debt was just shy of €3 billion.
With years of recession, emigration and unemployment you’d expect the number of credit cards out there to have fallen off massively, but that’s not the case at all. Sure, the numbers are falling, but very slowly. At the last count, we still had 1,959,000 credit cards in our wallets and purses. A fall of just 12% from the peak.
With incomes taking a beating, you’d expect individual credit card debt to have gone up drastically too. But that hasn't been the case either. There’s been hardly any change in what we owe on our cards. Back in January 2009 we were carrying a balance of €1,325 per personal card. Now we owe €1,274, so we’re actually paying them down – albeit very slowly. But even that that doesn’t tell the whole story. Over the last three years, the total amount of outstanding credit card debt has gone from almost €3 billion to just under €2.5 billion.*
So the cards that were retired were paid off in full and we’re not adding debt to the ones that are still out there. This is amazing stuff. Here we are in the middle of the biggest recession in living memory, we’re being squeezed from all sides and we’re still not adding to our collective credit card debt.
Most Irish people are careful and thrifty by nature. Sure we’ve had our moments of madness, but it looks like we’re back to our old selves again. A credit card with credit available is like an emergency personal loan that’s ready whenever the unexpected happens. We know this so we’re protecting the credit lines we already have… just in case.
Personal finance gurus tell us that we should get rid of our credit cards, they're bad news, too easy to use and the interest rates are too high - but we're having none of it. We've all heard that it's hard to get a loan nowadays, but have you ever wondered how hard it actually is? Well this might give you some idea. The amount of money loaned out to Irish punters for consumption (not houses) peaked in January 2009 at €29 billion. That number has dropped every month since then. There is now less than €16 billion worth of consumer credit out there. A fall of 45% in three years. It sure looks like loans are being paid off but new ones are not taking their place. It means what we've all suspected. You just can't get a loan - so we'll be hanging on to our credit cards for now thank you very much.
*In january 2009, outstanding Irish personal credit card debt stood at €2.946 billion. The most recent figures available from the Central Bank are for March 2012 when credit card debt stood at €2.496 billion.