Newly seperated - how do we divide up outstanding credit card balance?

sewbocushions

Hi,
I was wondering if anyone would know how to solve my problem???
My husband left me a month ago. There is a credit card in my name with a balance of £4,799.97 at APR of 16.9% (it's a John Lewis one). The minimum repayment was £144 this month. He has agreed that because we ran it up together (on essentials, food and petrol etc) that he will pay half. Neither of us can afford to pay off our half in one go. We can't transfer an amount to another card or loan as we have bad credit rating. If I get any extra money I want to put it towards paying it off but don't want to pay off more of his share. Is there a way of working out exactly who owes what? I can't work it our because of the interest added each month. I expect there is a formula but I can't get my head around it and wondered if any kind moneysaver would help me please?
Bo x

beverleyhills

As the card is in your name I think that it is dependent on his good will. Are you able to agree an amount to pay off each month? Will he pay his contribution into your bank account by direct debit?

sewbocushions

Yes, he is intent on paying half each month and I think he will but I was wondering if there was a way of working out exactly how much we both owe in the long run so that if I want to pay off more if ever I have any spare cash I won't be paying more than him as he'll only pay the minimum he has to! Yes, it will be DD hopefully!

Clariman

As others have said, the legal liability lies with you and you alone if the card is in your name. That said, it appears he wants to do the right thing and pay his share which is great. To calculate the precise amounts owing based on you paying off potential lump sums (as and when you can) is going to be very complex and is an unknown at this stage.

I think the practical thing to do is to agree a realistic payment plan which you can both meet, where you pay the same amount off each month. He should then set up a standing order for that amount to you for the number of months it will take you to pay off the debt. If you can then make lump sum payments on top of that, then you will benefit from the fact that it has been paid down more quickly - and I think that is fair.

You can use the Debt Repayment Calculator on the makesenseofcards website (where the SOA calculator is) to work out how long it will take to pay off your debts and what the total interest payable will be. For example, taking your figures and assuming that you pay £200 per month (£100 each), it will take you 30 months to pay off the card and it will cost you about £1000 in interest over that time. If you are happy with paying £100 each then he should set up a standing order for that amount for 30 months.

Hope that makes sense. If you have any difficulty using the calculator let me know.

Clariman

tyllwyd

I think it would be fiendishly difficult to calculate exactly how to split it up because you are trying to take into account the interest - and as soon as you start paying more, the amount of interest on your share of the capital will change and it all gets complicated. Being practical, I think you'd be best off sticking with a 50-50 split on your payments at the moment, then if your situation improves in the future, working out a way to separate the debt completely (pay off your half with savings, both of you take separate loans or some such).

GeorgeUK

Right now you both owe 4799.97 / 2 = 2399.99
If he were to pay £75 each month, after 41 monthly payments, he would owe 2.38

If he only pays the minimum (3%), the debt will take years to pay off as he will be paying less and less towards the debt each month so a fixed amount may be better.

to work out how much he needs to pay, you need to work out the monthly rate from the APR.
16.9% APR
0.169 in numerical form.
1 + 0.169 = 1.169
1.169 ^ (1/12) (1.169 to the power of one twelth - one month in the year)
= 1.013097 (subtract the 1 leaves) 0.013097
=1.3097% per month.

Have his balance and subtract his payment, then add the monthly interest for the next months total.
eg
2399.99 - 75 = 2324.99 + 1.3097% = 2324.99 + 30.45 = 2355.44

Clariman

GeorgeUK wrote: »

Right now you both owe 4799.97 / 2 = 2399.99
If he were to pay £75 each month, after 41 monthly payments, he would owe 55.26

If he only pays the minimum (3%), the debt will take years to pay off as he will be paying less and less towards the debt each month so a fixed amount may be better.

to work out how much he needs to pay, you need to work out the monthly rate from the APR.
16.9% APR
0.169 in numerical form.
1 + 0.169 = 1.169
1.169 ^ (1/12) (1.169 to the power of one twelth - one month in the year)
= 1.013097 (subtract the 1 leaves) 0.013097
=1.3097% per month.

Have his balance and subtract his payment, then add the monthly interest for the next months total.
eg
2399.99 - 75 = 2324.99 + 1.3097% = 23244.99 + 30.45 = 2355.44

or use the Debt Repayment Calculator

GeorgeUK

Repayment calculator says 42 months, but snowball calculator says 43??
I guess it depends when the first interest in paid and what the interest gets rounded to. Easy enough to put it into excel though to keep you right as you go along.

Clariman

Probably down to assumptions about when interest is charged and when payments are made. IIRC the debt repayment calculator tells you which month your balance gets cleared. It could be that the snowball one tells you which month you no longer have to pay? That would explain 1 month difference.

Jesthar

As the others say, the maths is going to be fiendishly complicated given all the interest etc., and much of it is going to depend on what is overpayed when.

As your ex seems ameanable to helping out with this, though, how about talking to him about trying a simpler solution? I agree with George that it is a very sensible idea to pay a fixed amount every month as this gradually increases your overpayments and clears the debt faster (my parents did this with their mortgage when the interest rate went down and knocked YEARS off the repayment! ), so how about asking him to try this? Say that you'd like to overpay on the debt as it will save you both hundreds in interest in the long term, and clear it a lot quicker, so would he be willing to consider paying, say, £100 a month towards it until it is cleared, and you will do the same? You can always negotiate the exact amount.

It might help if you went armed with info from the snowball calculator on how much quicker you'd pay it off and how much you'd save if you did.

Hope that helps!

~Jes

sewbocushions

wow! you're all great, thank you so much! Yes, I agree, to get it paid as soon as possible to avoid paying so much interest to John Lewis would be great. Yes, I'll show him the figures and see if he'll agree to help get it down quicker. You moneysaving experts are a fountain of knowledge!