0% balance transfer for partner's debt?

Monocle

Hi all

My partner has run up a debt of around £3,500 on his credit card. He is paying only the minimum amount each month, so the debt continues to mount.

He has been refused one 0% balance transfer card, and is wary of applying for more.

His latest statement says: "You are eligible for a preferential rate on balance transfers and cash advances of 5.85% p.a. until paid in full, 3% fee applies." This sounds good, but maybe I'm missing something. Is this the same as a loan at 5.8% per annum? Could he take, say, three years to pay it back?

I was also wondering if I could get a 0% card in my name, but have his debt transferred to it. I am a little reluctant to do this, as I have a good credit rating, and don't want to jeapordise this.

Thank you for your time.

Robert_Sterling_3

The cost involved here is that on £3,500 the 3% fee would be £105 added onto the debt on day one to make it £3,605
and then 5.85% thereafter. So in year one the interest rate might be rather about 8.85% or more.

Read all the small print too. There might be a few timebombs hidden away there.

You could do what you are reluctant to do but many posters at MSE have lived to regret transferring someone else's debt to their card. DON'T DO IT.

YorkshireBoy

Monocle wrote: »

I am a little reluctant to do this, as I have a good credit rating, and don't want to jeapordise this.

You won't create a financial association (assuming there isn't one already) by buying his debt if that's what you meant?

Your credit rating will suffer though, because you'll owe £3,600 more than you previously did.

anotherpaul_2

Monocle wrote: »

His latest statement says: "You are eligible for a preferential rate on balance transfers and cash advances of 5.85% p.a. until paid in full, 3% fee applies." This sounds good, but maybe I'm missing something. Is this the same as a loan at 5.8% per annum? Could he take, say, three years to pay it back?

He'd have to transfer it somewhere else and then back, so there might be two transfer fees. A new card offering a life of balance transfer rate might be better (if there are any at the moment).

As, check if they small print says the 5.8%pa is variable. If it is, they could up it in 6 months anyway, at least in theory.

Monocle wrote: »

I was also wondering if I could get a 0% card in my name, but have his debt transferred to it. I am a little reluctant to do this, as I have a good credit rating, and don't want to jeapordise this.

As others have said, it becomes your debt. Before you do this, consider what would happen if he could or didn't pay you the repayments. If you're happy that you can afford to make them yourself, then it's a possibility.

Monocle

Many thanks, Robert, YorkshireBoy, and anotherpaul. My instinct is not to go for a card myself, because of the risks. Given his difficulty of getting a 0% card with a high enough transfer balance (one has offered him a maximumof £700) and the likelihood of being unable to get others in the future (to transfer the debt again), it seems a bank loan to clear the debt might be the better option, even though interest charges could be a little higher overall. At the moment, there is little between the minimum payment and the interest...so he's effectively standing still.

anotherpaul_2

Monocle wrote: »

Given his difficulty of getting a 0% card with a high enough transfer balance (one has offered him a maximumof £700) and the likelihood of being unable to get others in the future (to transfer the debt again)

He could at least transfer some of the debt to the 700 limit card? It would reduce the interest by 20%.

Richard_Cocks

Can he not try and make overpayments to the card? If he really can only make minimum payments, would he be able ot keep up with a loan?

Monocle

Richard_Cocks wrote: »

Can he not try and make overpayments to the card? If he really can only make minimum payments, would he be able ot keep up with a loan?

Currently looking into getting a loan to pay off the card debt. Thanks for your input, Richard.

IWantToBeFree_2

Going down the consolidation road can be bad, I have done it twice, my partner once, and we still have credit card debt, and now 3 loans to boot. You need to address the root of the problem, because who is to say that once the credit card is paid off, your OH won't just spend on cards again?

I recommend you go over to the Debt Free Wannabe forum for some advice.

Robert_Sterling_3

Many posters on MSE have learned the hard way that putting someones dent on your credit card is not a good idea.

See also the writing in blue below.

Monocle

Thanks, IWantToBeFree - an interesting and informative forum.

One more question on this topic. My partner seems to be in a bit of a Catch 22 situation here. There are some good deals on BTs - such as MBNA's 5.9% for life of balance, or the many 0% cards for set periods. However, given that's he been turned down for one and offered just £700 on another, he's worried about how simply enquiring about (essentially applying for) other cards would affect his overall credit rating. Thanks again, everyone.