Credit cards: fury as pensioner, 95, runs up debts totalling £80,000
For some people, running up massive debts is dangerously easy – while those who could actually afford the repayments can find themselves inexplicably turned down
The credit card industry is under fire for 'irresponsibly' allowing a pensioner to run up an unpayable debt. Photograph: Nicholas Rigg/Getty Images By Miles Brignall
Guardian Money reader Don Burden has blasted the “irresponsible” credit card industry after it allowed his 95-year-old father to run up unpayable debts of more than £80,000 across 10 separate cards – in spite of having a monthly pension of just £1,200.
Burden discovered the debts when he started going through his father’s affairs after the second world war veteran died last year. Almost 12 months later, he still can’t believe how the credit card industry collectively allowed it to happen.
Having been made an executor of his father’s will, Burden had to sort all the paperwork, and it quickly emerged that the pensioner – who was also called Don and also shared his son’s birthday – had managed to take out lots of credit cards, despite only ever making the minimum payments on his previous cards.
He also had an outstanding mortgage debt of more than £10,000 when he died – but this proved no barrier to the card providers who, his son says, were happy to approve multiple applications over the past 20 years, despite it being obvious to anyone who looked into his father’s affairs that his modest pension afforded him no prospect of ever repaying the debts.
All efforts to get the providers to explain how this happened have led nowhere, Burden says. Instead, they simply send ever-more threatening letters demanding that the bills be paid.
The typical interest charged is likely to have been as high as around 30% over the period concerned. At that rate, even small amounts on cards will swell to significant debts if left unpaid.
“My father was a stubborn man who fought in the RAF in the second world war and kept his business very much to himself,” Burden says. “I had no idea this was going on, and the more I look at it I can only conclude that he had got himself into a spiral of debt – taking out another card to pay off the previous card’s debts.
“His house was filled with letters from providers and their aggressive debt collectors, as well as credit card cheques that he must have used to pay off the debts. As far as I can tell he only ever made the minimum repayments, which meant he was accruing interest each month. And yet all the card providers appear to have been happy to approve him for another card.”
Don Burden whose late father left £86,000 credit card debts which the banks are trying to collect. Photograph: Graham Turner/Guardian
Burden, who lives in Dunstable, Bedfordshire, says that when he asked the providers if they would now lend this amount of money to a 75-year-old in similar circumstances, they all declined to comment. He says he was told that their lending criteria had changed.
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Burden senior followed his time in the RAF with a long career in the steel industry in Sheffield. He had been retired since he was 65 and had moved to Cornwall.
“It wasn’t as though he was living it up every night. His idea of a good night out was to go down to the British Legion club and play a game or two of snooker while he drank a soda water,” Burden says.
“He can’t have had any disposable income as it would have all been swallowed up by the card payments. I find it incredible that the card companies do not want to take any responsibility after offering these facilities to someone so old and incapable of ever repaying the balances offered. The card firms are wanting these debts repaid from his estate and are threatening legal action.”
Burden says the card with the highest outstanding debt – more than £10,000 – is a Barclaycard, and that the Co-operative Bank’s debt collectors were among the most forceful.
A spokeswoman for debt advice charity StepChange says that throughout the late 1990s and 2000s, large multiple credit card debts were a notable feature of serious debt problems, and despite card data being shared between lenders, it was not always being used to ensure responsible lending. More recently the picture has improved, “[but] it is still far from perfect, and multiple credit card debt is still a big problem”. The charity says that last year, 64% of the people it advised with credit card debt had two or more cards, and those who had five or more had an average debt level of £24,600.
A spokesman for the Co-op Bank told Money that it wrote off the debt in 2012 and, as a result, “the bank won’t be chasing for any payment”.
Barclaycard says it carried out full credit checks before opening Burden’s two accounts in 1991 and 1995, adding that they were kept in good order until 2005, when repayments suddenly stopped. “As soon as this happened, we made numerous attempts to contact him to understand his circumstances, stopping his cards while we did so – but unfortunately we were unable to gain a response.
“After successive non-payments, we closed one of his accounts and froze the other. The debt on the closed account was passed to a third party. For the frozen account a repayment plan was agreed through a third party on Mr Burden’s behalf, to help him pay down the outstanding balance, which remained in place until May 2014.”
Barclaycard adds: “We take our lending obligations extremely seriously and believe we acted in a responsible way at all times. The case is now with the Financial Ombudsman Service, and we await their final decision.” In November, city watchdog the Financial Conduct Authority said it would investigate whether credit cards are being marketed too aggressively, amid concerns that plastic payment is allowing consumers to run up debts they cannot afford. At £150bn a year, the UK credit card market is the largest in Europe. The ongoing study will examine whether cards are marketed “in a way that works against the best interests of consumers”.
The credit card industry is under fire for 'irresponsibly' allowing a pensioner to run up an unpayable debt. Photograph: Nicholas Rigg/Getty Images
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