Credit Card Crunch?

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judyb6

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Hi Guys!:biggrin:

I thought I would start a thread on this as I would be very interested to hear if any other geeks have bee thinking about this...

It was in the news this week that 160,000 EGG credit card customers have had their existing cards withdrawn after a review of their credit rating. Other credit card companies may well follow suit in the panic over sub-prime lending. It is, apparently, also going to get harder for people to obtain credit cards and loans.

In the salon that I work in, I would say around 20% of my clients pay by credit card, and I do notice it is often for those luxury treatments... facials, body massage etc.

So, with a few quid extra to pay on their mortage and less credit cards, it stands to reason that the more 'luxury services' that many of us offer may well be the first thing people give up when making cutbacks.

I know we all have our bread-and-butter clients, but does anyone think this is going to have an effect on our business? I for one know that I can't live on leg waxes and file and polishes alone!

Have any otehr geeks been thinking about this?!!? :?:
 

izzidoll

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Bagpuss

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Well from a personal (not business) point of view I think its great !!!....For too long these lending companies have turned a blind eye to how much debt people already have and just keep lending and lending.....Shame that only now, that it is effecting there profits are they getting worried.

Because of the massive increase in people having to resort to bankrupt and IVA's they are no longer guaranteed to get all there money back.....thats why they are now vetting people's credit files to see how much debt they already have and if they are managing it well....had they done this in the first place and refused people who already had debts over there heads then they wouldn't be in this situation.....they have no-one to blame but themselves.

(sorry...this is a passionate subject to me)
 

Susie H

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Well from a personal (not business) point of view I think its great !!!....For too long these lending companies have turned a blind eye to how much debt people already have and just keep lending and lending.....Shame that only now, that it is effecting there profits are they getting worried.

Because of the massive increase in people having to resort to bankrupt and IVA's they are no longer guaranteed to get all there money back.....thats why they are now vetting people's credit files to see how much debt they already have and if they are managing it well....had they done this in the first place and refused people who already had debts over there heads then they wouldn't be in this situation.....they have no-one to blame but themselves.

(sorry...this is a passionate subject to me)
Angie, I am 100% with you on this one.
We don't have a credit card, or an overdraft, or a bank loan, no store cards and no buy now pay later.
We learned the hard way and for the first time ever when we go to buy things we haggle for a discount for cash paid and have money in the bank before pay day.
I'm not the holier then thou type and I feel that if you are trying to get on the property ladder then a credit card is a very good way to raise your credit profile but the whole hype about credit cards is a con.
Why should you spend your hard earned money twice?
You buy something and then in comes the bill and there it is plus the interest:irked:
Back to the original question, People will always promise them selves that they will stick to a budget, not over spend, cut back yer yer yer:zzz:
My experience is that when they do this, you have a quiet month and then the following month you are twice as busy because people cant stand living like Scrooge, they manage for a few weeks and then just like me when I break a diet:lol: they don't just carry on normally, they splash out, to treat them selves for being so good. and the warmer the weather gets the more our ladies want to look their best.
 

Blue Rose

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When I opened my salon back in 1991, we were mid recession. I managed to weather the storm and over the years it has peaked & troughed.

Some times it has been a real struggle and I have thought many a time about calling it a day, but then the weather will get better, the phone starts ringing again & all is good takings wise.

As to losing clients, i think some of it will depend on your pricing stucture. If you're the lower end of the market or one of the cheaper places in town you may attract a clientelle who are money sensitive. If they're already watching the pennies, then you may end up losing some clients.

If, on the other hand, you are one of the pricier establishments, clients perhaps may not be as price sensitive. Maybe they'll forgo a takeaway or two to pay for their beauty treats instead.

Feedback from my clients the last week or two is that with all the doom & gloom in the news, they want to spend EVEN MORE :) than usual to cheer themselves up.

Oh, another thing is, we don't accept credit cards so peeps have to have the funds anyway to come in.
 

chantell simone

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i think that for as long as people can get credit there will always be debt

i often hear a lot of people say that debt is a part of life, but i think that is due to the fact that many people live way beyond their financial means

i no longer have a credit card as i learnt the hard way!
 

Bagpuss

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Thing is... People cant wait anymore. These days everyone wants everything now....becouse they can, with credit.

Years ago people saved for things....heck when we first got our home we had second hand stuff until we could buy new stuff.

The when you see everyone around you having new this and new that you start to think "why cant i".... but what you didn't think was "they have debt"...........i so wish i knew then what i know now....but am thankful that do know now.

If anyone is struggling with debt, there is help. www.iva.co.uk its not just about IVA's its about debt in general.

(sorry to the thread started for getting side tracked) x
 

judyb6

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Hi guys!

Well thanks for your replies...some interesting points there!

I just wanted to make it clear that I wasn't suggesting people should be getting themselves into debt! I wasn't saying it was right, but people do pay for treatments and products with credit and I'm sure any kind of crackdown is going to have a knock-on effect in our industry. Please don't think I was advocating irresponsible lending or people getting themselves into debt. That wasn't the idea at all.

I also wanted to add that, even if you don't take cards, it doesn't necessarily mean credit cards aren't facilitating your clients ability to purchase treatments from you. I know friends of mine that go to a nail tech who only takes cash. If they don't have the money, they just pay for their groceries/petrol etc with a credit card and use their spare cash to pay for their nails. Not a great way to do it, I know! I'm not advocating it, but it does happen.

I have friends and clients who've been riding high on the fact that their houses are going to make them lots of money and they've been spending out on a fairly lavish lifestyle presuming they had a safety net, who are really panicking now! I've lost one regular spray tan client because her husband had told her she just can't justify spending the money on it anymore.

I think you're right, that there will always be the clients who are not at the mercy of the property markets or the credit card companies, but I know I for one have become maybe a little too used to the clients who were taking advantage of the favourable financial climate to afford their little luxuries... and I'm going to miss them!
 

'chelle

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My husband was telling me that on the BBC news, they reported that EGG had actually cancelled lots of accounts belonging to people who settle their accounts in full at the end of each month, thus never incurring any charges, and never generating a penny profit for the credit card company!! They have been accused of using this excuse about bad credit to get rid of unprofitable customers (although I'm sure they are addressing the bad credit issue also)
 

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