one of the first thing you notice after moving to the UK is how prevalent credit is in everyday life. Ads in the tube, constant mail from your bank and of course the ubiquitous store cards are there you remind one that it doesn't matter when you pay for it, as long as you keep shopping. As Sarah Palin might say, "charge, baby, charge". Of course with the current economic downturn we have a reminder of how quickly that can change once banks and financial establishments decide to turn off the spigot, but overall you still get the sense that much of the growth of UK's economy is aided by future income, since that is in essence what credit is. In fact the Guardian reported this year that debt growth was higher than GDP growth, a fact that highlights how systematic the recourse to credit has become for consumers. In comparison, the level of household debt stands at 47% in France, or less than half that of the UK, which has the highest such level among the major European economies.
As a new-arrivant here it is awfully tempting to participate in this real-life Monopoly (side-note and top 5 WTF of the year: is Ridley Scott really directing a movie based on the board game?), but as I've found out, it's not at all that easy. Having opened a current account (Barclay's) within the first few days of my arrival, I was still using my French-based card for most expenses and, focused on starting a whole new life, didn't feel the need to go beyond the basic debit card provided by Barclay's. Over the next few months I thought about it from time to time, but never felt a need to take the plunge. In late 2007 I took a trip to Brittany, where I'd booked a rental car from the Nantes airport. This is where I found out that none of the major car-rental chains accepted debit cards, or even any alternatives I suggested (getting my mom's CC number over the phone, paying cash for the deposit...). With a 150km journey still to go to my destination, I had to improvise, which resulted in 1 cab ride, 2 trains and a 11:30pm pickup from my grandma at the train station. My grandma's in her late 80s, so let's just say driving late at night isn't her favorite thing to do. Once back in the UK, I decided to apply for a credit card at last.
This is where the main sticking point happened: in the UK, if you want to get a credit card, companies look at your credit score. If you've just moved here for the first time, you don't have a score. So you need one to get one, but if you don't have one you won't get one. Clear? Having got rejected from online applications to Amex and Barclays, I realized this might be a bit trickier than I thought. Yearning to stay away from the cold automated rejection letters (and complete lack of explanation from the associated helpdesks), I decided to stop by my bank branch a few months ago to see if my application could be processed by a real-live person, who could perhaps look at my situation and at least explain to me why I wasn't authorized to join the splurging masses. Going through my salary and current financial situation with the advisor, I was told there was no reason why I wouldn't get approved and that we'd do the application together to ensure success. And sure enough, two weeks later, I got a shiny new credit card in the mail, with a humongous £250 credit limit. Really nothing to brag about, but I figured it was a start, and at least I'd have one if necessary.
Needing to activate the card, I called the number stamped on it, thinking that it was pretty good timing, since i had my trip to Australia in a few weeks and would definitely be able to use it there. But when I called the number, I was told the card was already activated. Thinking that was a tad weird, I called the Barclayscard helpdesk and asked if there was a problem. After a few minutes of looking around on the system, the helpdesk operator explained to me that in fact the card had been cancelled, since Barclays had realized I wasn't fit to hold one after all. By this point I was wondering if I was stuck in a personal-finance episode of the Twilight Zone, and asked for more explanations. Unfortunately the calculations made to authorize or reject people are all automated, so no one can really tell you what is wrong when you're not accepted. All the person on the line was able to tell me was that I could cut up the card since I wouldn't be able to use it. Now there's some sound advice, not sure I would've thought of it on my own.
This happened over the summer, and since then I'd kind of resigned myself to being credit-less for a few years. Indeed through my application processes I'd noticed that they always ask for 3 years' addresses history in the UK, which I obviously do not have. Was it possible that my lack of credit score, and recent arrival in the country was the thing blocking all my applications? Too bad I couldn't ask the giant robot running the process, that guy's pretty heartless if you ask me.
Then last week I saw an ad for Capital One, and remembered how in the US they were known for giving out credit cards to pretty much anyone. Despite knowing that each negative application can adversely affect you credit rating, I decided to try once more, figuring that it was worth a shot, having done my last one five months prior. Upon completing the grueling two-minute online form, I got the usual "we'll let you know" message and figured they were just cordial and preferred to send the rejection letter through the mail instead of telling me straightaway. Because nothing says courtesy like a mass-reproduced letter of denial. Only thing is I actually got accepted for the basic card, apparently, and sent back my signed agreement yesterday. So theoretically in 7 to 10 working days I should be the (oh-so) proud possessor of a Capital One credit card, with a minimum credit limit of £100, and a sweet 34.9% APR. Unless they decide to go for the sneaky Barclays-style now-you-see-it, now-you-don't technique. Either way I'm not sure I'll have a better understanding of how logical the process is, having seen so many shows on TV about uni students being able to get into £40,000 of debt while I'm stuck with my junior-high debit card.
After these various ups-and-downs I don't think I've become any savvier to the credit card scene here, but I do know one thing: my next salary falls on the 16th (hooray for Xmas early payment dates), on the 17th my primary bank account won't be at Barclay's.
