Posts Tagged ‘debt’

Legal tender is money, right? But what is illegal tender? If we have a term like ‘legal tender’, what does that mean, and what does it mean for things that are not legal tender? I was thinking about this on my walk home today. Luckily Wikipedia came to the rescue with a good write-up on the subject.

Legal tender is anything that can be used to settle a debt. If I owe Fred £10, I can give him a £10 note and the debt is paid. He cannot say “no, I only accept coins”, because a £10 is legal tender and therefore has to be accepted as payment of debt. The UK has some quite complex rules on it. For example a ten pence piece is legal tender, but only up to a certain value of £10. Someone is not obligated to accept a payment of £1,000 in 10p pieces. Guidelines are available from the Royal Mint.

Things get a little more complicated around the union. Notes issued by the bank of England are legal tender in England and Wales. Scottish bank notes however, are not. In fact technically Scottish bank notes are not even legal tender in Scotland, though they are typically accepted to be by general agreement.

Another issue that comes into play is whether you have a debt, or whether you are treating. If you have not yet established a debt, the trader is under no legal obligation to accept your money. So a shop or a bus could refuse to accept a £20 note from you (many shops due refuse £50 notes) because no debt has yet come into play. However, if there was a debt established and then payment has requested, so as an invoice or a restaurant meal, they would then be obliged to accept your legal tender.

It is sometimes claimed that stamps are legal tender. This is not the case, and was confirmed by the Royal Mint.

I normally pay off all off the full balance of my credit cards via direct debit each month. However when it came to renewing my car insurance last summer I calculated, given the amount they charge you to pay monthly, it was actually cheaper to pay the whole lot upfront on my credit card and pay that off each month than it was to just pay my car insurance monthly.

As such I’ve had a rapidly diminishing but never the less outstanding balance on my Lloyds TSB credit card for the past couple of months.

Bare in mind that this is a credit card which I have held for over three years now and never have they written to me regarding it. Then today I was opening my mail and found a letter announcing that they had increased my credit limit. Actually, according to the letter, they have increased my “credit limit.”

And I know, I know, a corporation is by definition a soulless entity without feelings designed to grab as much money from people as possible by whatever means and I am normally the first to preach about how you can’t really judge such an entity for immortal practices because it is by it’s very nature amoral.

But seriously, we’ve just gone through a global financial meltdown. Indeed one which Lloyds TSB was actually bailed out by the government. And when I say by the government I mean by me, because the government is funded by the huge tax bill I pay every month.

Now I don’t particularly care that they have done this because I’m not going to go out and spend the extra money and struggle to pay it back, I have far higher limits on my other cards anyway. But there must be thousands, tens of thousands, even hundreds of thousands of people out there who would go out and dig themselves into even more debt which they would struggle to pay back all because the banks saw another opportunity to take advantage.

Wankers.