Banking Without Borders
00:21:23 · Jonny Pease
[00:21:23] S0: Buy now pay later providers can impact your credit score. Applying often uses a soft credit check, which won't obviously affect your credit score. However, they will report the repayment data. So if something goes wrong there, then that'll be reported. If something goes well or you pay it off properly, that'll also be reported. So it can be positive. But I think that's important, Jan, to bring up, isn't it? Because you know, if you if you go down the card route, for example, there are certain ways to do it properly, aren't there? Like checking your eligibility first, you know, doing the soft searches first, TSB. They both have checkers in place. So you can check to see if you'll be accepted before. Having anything impact your credit score, whether positive or negative. That's yeah, that is crucial. You're absolutely right. A couple of other crucial things, I suppose. You know, never take cash out on these credit cards. I think that's obvious. Um, and also clear it before the deal ends. I already mentioned that once, but I want to stress that a lot of these cards, a lot of these balance transfer cards, and buy now pay later products as well. If you don't clear them, the interest will start to kick in and in some cases increase, get worse. You'll end up having to pay more and more and more off. You've got to be very calculated about this if you're gonna do it. If you're gonna borrow money, you must be able to pay it off. You must be strict about that. Tattoo it to your hand. Must pay off. It might cost money as well. Please. Yeah, that might cost money. Don't put that on the credit card. So, what if you have to take a loan out, Jan? What if you've got to do a personal loan? What if you've got to go through Revolut, Monzo, Santander? Are there any things that we I you know, I think we've been relatively balanced in this episode and try to because I understand that some people have to do it, some people have no other choice. So, Jan, what if you are someone that has no other choice but they need a personal loan?
00:23:07 · Jan Watermann
[00:23:07] S1: Yeah, I'd say be as conscious about it as possible and try to get the best possible rate for your personal situation. Unfortunately, these interest rates that are being published. You know, they're just the representative rates, as we've mentioned in the beginning. And it's difficult to really figure out which interest rate would apply to you. So ideally, go ahead and request um details from a few different lenders. Make sure they do a soft check, not a hard check. And this is very, very important because if they do a hard check every single time, then you'll see that these interest rates that are being offered are slowly getting worse, and there might not be a way to go back up the ladder and get the first rate you've requested. So really be careful about that. And I would say maybe talk to your banker. Maybe you're you're banking with a high street bank, maybe they have a history with you, they know that you're somewhat reliable, yet you pay your bills, then I think the chances are high that you'll get favorable conditions from them. And yeah, look for the dialogue, talk to your banker, uh, maybe even in person. I think that's that's where having a banker, you know, person to talk to in a branch is actually very favorable, you know, can be a huge advantage because they can they can help you access the best possible offer there with ease, typically.
00:24:23 · Jonny Pease
[00:24:23] S0: Do you have do you ever think about like when we talk about personal loans, you know, who's actually taking out a personal loan? I think we talked about this briefly, but when I think about loans, right, I find them very scary. Um I think about businesses borrowing to build, to grow, and in some cases, if you do it calculated, it can actually be an incredibly powerful way to grow a business. But when it comes down to loans, it just feels like personal loans, I should say. It just doesn't feel like a good decision ever. Like, when is a personal loan actually a good thing? I don't think it is, right?
00:24:56 · Jan Watermann, Jonny Pease
[00:24:56] S1: Yeah. Difficult. If if there's really no alternative for you and your washer breaks, let's say, then what are you gonna do? Car repair, you know, what you're gonna do? Yeah, there's certain things that you just have to have capital for. And um, if your homeowner of your renter and you own things, then appliances especially, they'll break eventually. It's just a matter of time. And if you don't have money um saved up in order to pay for the repair or potentially a new device, what are you gonna do? You gotta take out a loan, you gotta get money from somewhere. And I think in those situations, there's just yeah, no way around trying to look for external capital sources. But what you should never do is fund your vacation with a person loan or something, which is actually funny something that Revolut has been encouraging me to do several times. Uh, you can show an email on the screen, like literally um trying to sell me a loan for my vacation so I don't have to use my savings for it. Excellent. And I think that's yeah, that's something you should definitely not do. Um, that's our advice, but yeah, plenty of other things that you shouldn't do. Anything that's consumption related that you can avoid, just don't use external capital for that. Rather, save up some money, it'll feel better that way as well. [00:26:05] S0: Agreed. I'm rather disturbed by Revolut. Encouraging you to borrow money to pay for a holiday. Yeah, literally. And I'm getting so many examples. Has anyone got any other stories? [00:26:14] S1: I'm sure. I'm sure if that's it.
00:26:14 · Jan Watermann, Jonny Pease
[00:26:14] S1: I'm sure. I'm sure if that's it. [00:26:16] S0: Has anyone got any other examples of that? [00:26:17] S1: Yeah, I'm sure, I'm sure. There are people listening from the European Union that have received the exact kind of emails as well. You know, maybe different use cases, maybe it's not a vacation, maybe it's something else. I don't know, but it's yeah, questionable at least. [00:26:30] S0: Yeah, I wonder uh I wonder if the ECB regulates it differently, or whoever's the regulator in the European Union or the EEA. Like, I don't know if you could get away with that in the UK, you know? Encouraging people to take out a personal loan to pay for a holiday. Why shouldn't you be allowed to do that? Well, I guess if you're willing to pay the interest on the holiday, I I don't know, Jan. Why shouldn't you be able to do that? [00:26:48] S1: If someone is willing to do that, you know. Um I I I'd say it's uh it's a free market, you're probably allowed to do that. I mean, there's certain regulation, but it's typically related to facts. You should not um yeah, you should not advertise wrong facts. I get that. But should you I mean, I I think you should be allowed to advertise this kind of thing. I think there shouldn't be any regulation. I'm not a fan of regulators prohibiting everything in a market. I think the market needs to self-organize itself, and I believe also that people should, you know, be aware of these kinds of things and hopefully develop a consciousness that they shouldn't do these kind of these kind of stuff.
00:27:21 · Jonny Pease
[00:27:21] S0: I just don't I just don't agree with that. I just think fundamentally a loan could be a really awful thing for most people. Because the people that need to take out a loan cannot afford to pay pay for something or pay at that moment in time. Yes, I bought a mattress on 0% interest across 24 months. I could have bought the mattress if I wanted to, but I chose to invest the money instead. Yes, okay, I do that. But when we're talking about a loan that requires you to pay interest off over time, I'm sorry, that is not a good thing. And I think there should be regulation around the language that's associated with advertising. They shouldn't really be advertising loans, but the way they are positioned or or or or or or spoken about, sorry. Like, okay, you could advertise this as hey, are you in a pinch? Do you need money right now to repair your car? Did your pipes burst? Revolut are here to help. And we're offering a bit of an interest rate, but we won't penalise you for paying it back. So you can take the loan out now, and when you get paid in two two weeks, you can pay us back and we won't penalize you. But yeah, I really don't I'm not a big fan of regulator regulation as well, but I really don't think we should be selling loans as a way of paying for holidays, so I can go to the beach in the Maldives.