| Credit card companies home in on ‘homeless youth’ |
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A report ‘Too Much Too Young’ released by Centrepoint, the homelessness charity brought to light the heights to which credit card firms had reached in attempting to create new customers. The study showed that credit card companies along with catalogue firms were now inciting the homeless youth to take on some credit.
It was quite shocking how about one fourth of the young population examined, admitted that they had been approached by card companies for credit through promotional material like flyers and brochures. In fact, some lenders were found sending their advertising literature directly to the hostels and had also set credit limits at their own will. They sent out letters notifying the same but many who had shifted accommodation did not receive these notifications.
Anthony Lawton, Centrepoint’s chief executive, understandably seemed disgusted by the whole issue and said that there was an immediate need for stringent measures to control such unsolicited marketing of financial goods to the vulnerable and homeless youth and called the observation “unconscionable”. The head of the Child Poverty Action Group, Kate Green also expressed resentment about the practice and called it "sick".
Even worse, most of these young people were now found spending in excess of their capacities and ultimately paying high interest repayments. This had pushed them under the perilous shadows of high debt levels, what with 82 out of every 100 on an average owing £1,000 and some having debts mounting to even £15,000.
Further analysis showed that the youth were susceptible to taking on excessive debts on account of reasons such as poor salaries, poor financial understanding and undue delays in getting administrative benefits. Also, the young population got easily lured into credit offers since they had always faced a deficiency of proper access to credit and mail order catalogues, especially fascinated several young borrowers since they did not have cumbersome credit regulations like the ones in bank loans or credit cards.
High debt levels of these homeless youth had now afflicted them with stress and depression. Centrepoint noted that a third of the indebted youth were struggling to make repayments and were, as a result, under treatment for mental depression. Out of 10, four had not paid their rents and the same proportion had borrowed some money from their relatives and friends. Default on debt repayments had long lasting detrimental effects on a young person's individuality and financial standing as it highly endangered the youth’s chance to own a house of his own.
Mr. Anthony Lawton asked the Financial Services Authority to take up the matter and make sure that lenders did not fix credit limits without being asked to by their borrowers. FSA in turn informed that a website as well as three pilot schemes had been launched to assess and provide financial knowledge to the young adults between ages 16 and 25. Nevertheless, no comment was made on the lenders sending mails directly to the hostels.
Posted
on : Wed, 06 Apr 2005 00:00 GMT | Credit Cards News
By : Mike Lawson
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