I’ve written here before about the bemusing availability of credit in the UK at the moment. You’d think that given the ropey state of the banks on one hand and the ropey state of the consumer on the other, credit would be a tad harder to come by than it was back in the crazy days of 2007.
Not so. An article by the remarkably sane Liz Jones in the Daily Mail makes it clear just how easy it is for young women in particular to get their hands on cash. Jones visits Very.co.uk, the site which relatively recently signed up the likes of Holly Willoughby and Fearne Cotton to design fashion lines. There she finds clothes that are very “pretty” and of which the celebrities in question are “fiercely proud.”
However, what happens if you buy, say, a £55 puff dress from the site? If you buy it with your debit card you pay £55 and you get a dress. However, if instead you choose one of Very’s “Get it now, pay nothing until October 2011” offers – which you are offered before you check out – it could cost you a lot more. If you start paying in monthly instalments then the dress will cost you over £80 (including interest which will be backdated to the day you bought it). And the APR? Nearly 40%.
You might think that we shouldn’t worry too much about this kind of thing on the basis that today’s rigorous credit checking would mean that not many of the kind of people Very is aimed at (looks like the under 28s to me) is likely to be offered credit any more. Again, not so. Liz Jones is famously almost bankrupt (she writes about her financial misery in the Mail on Sunday’s magazine most weeks). But she was offered £1,000 to spend by Very “after a few seconds”. So was Georgina Earle of Women in Debt who has “no income”. Clearly, with an APR of 40%, Very’s financial services providers will be making more than enough from those who do pay up to cover the costs of those who cannot.
Of course, it isn’t just online or just at Very that it is so carefully being suggested to women that they borrow to buy. It is everywhere. I bought a pair of shoes in Topshop last week. I paid in cash, but not before I had been asked if I had a Topshop card. This is apparently “the most fashionable way to pay” and comes with all sorts of goodies attached. You get a “fabulous £5” off after you have spent your first £50 and you will be “rewarded with birthday treats”.
I’m old enough to know that no amount of what Topshop considers to be an appropriate birthday treat will ever compensate for the 20%-plus interest rates the card will charge me. But most of Topshop’s customers are at least 15 years younger than me, and they may not. As Jones says, “to endorse a company that helps persuade impressionable teenagers to spend double on a dress that will be out of fashion come January let along next autumn, and to offer £1,000 in credit without satisfactory checks is… irresponsible.” Given the extent to which and the frequency with which debt ruins young lives, I think it is rather more than that.