What do you think of this idea?

MissShoes

Evening, rather morning all...

Just a question for all you wise owls...

I was discussing my debt issues with a family member (high interest rates, can't get 0% or cheaper cards, can't consolidate even if I wanted to, rates keep going up and I'm getting nowhere fast).

They mentioned they had 7-8k space on a cheap card ie cheap to balance transfer that they'd be happy to let me use. This is a family member who I have a very close relationship with and who I trust completely and they trust me.

Looking at my debts, (13k), I think this might be my only option 2.5k of my debt is now interest free and I pay 255 a month, meaning there are 10 payments left. This company along with 2 others, might accept f and f offers. Realistically, I could get 80% of my debt onto their card and the rest would be easy for me to knock down each month.

I suppose my question is...is this a good idea? I would want to sign some kind of paperwork to protect them- not that I anticipate any problems, I have a very secure job and icome. I know people say never mix money with friends but this might be a way out. I would pay 800 a month to them until all the balance and any interest/charges were clear.

Thoughts?

Thanks all

Shoes x

LBG_worker

I think it is a great idea especially as the interest on credit cards can be crippling - having some of your debt at 0% means you can pay it off much quicker. The only problem is you should pay off your most expensive debt first and therefore ideally your 0% should be a last priority but I appreciate in this case it will have to be your first (meanwhile the other debts snowball!) Seeing as the debt could be 0% have you considered opening a savings account - just pay off the minimum payment on the card and save the rest in a savings account ready for when the 0% comes to an end. I know some people may say it's not worth it with interest rates being low but you are putting a lot towards repayments and every penny does count! if you don't trust yourself get the card holder to set one up in his/her name for you and just set up a standing order to the account. Just a thought!

nekosuki

Hi MissShoes, I would check that they will let your relative transfer a balance which isn't in their name initally. Also, if your relative's credit card is the same company as your debt they might frown on this and not let you do it.

But if both of these are OK, then it sounds like a great idea. You may like to get something in writing to agree what you will pay first though, from reading on these boards, lending between friends and family can very easily turn sour!

Good luck with it!

cydney65

Hi,

I transferred £5,000 to my partner's low interest card in march. It is now down to £1,400 and I am hoping to clear it by jan 2010. I was very reluctant at first to do this, but have found that the embarrassment of using her credit has been a fantastic incentive for paying it off. It has also made me face up to my appalling money habits. So, I would say yes it's a good idea.

Good luck and best wishes

CydneyX

MissShoes

LBG_worker wrote: »

I think it is a great idea especially as the interest on credit cards can be crippling - having some of your debt at 0% means you can pay it off much quicker. The only problem is you should pay off your most expensive debt first and therefore ideally your 0% should be a last priority but I appreciate in this case it will have to be your first (meanwhile the other debts snowball!) Seeing as the debt could be 0% have you considered opening a savings account - just pay off the minimum payment on the card and save the rest in a savings account ready for when the 0% comes to an end. I know some people may say it's not worth it with interest rates being low but you are putting a lot towards repayments and every penny does count! if you don't trust yourself get the card holder to set one up in his/her name for you and just set up a standing order to the account. Just a thought!

Thanks for your advice. I had thought about the fact that 0% is left until the higher interest credit is paid off. If I could managed to reduce a couple of the balances doing f and f, I might be able to just have my overdraft (2k) left which is 0% and everything else on the card or my interest free 2,5k and my overdraft left over (although I'm bearing in mind that the 2.5k might be one that I could reduce).

MissShoes

nekosuki wrote: »

Hi MissShoes, I would check that they will let your relative transfer a balance which isn't in their name initally. Also, if your relative's credit card is the same company as your debt they might frown on this and not let you do it.

But if both of these are OK, then it sounds like a great idea. You may like to get something in writing to agree what you will pay first though, from reading on these boards, lending between friends and family can very easily turn sour!

Good luck with it!

I haven't even thought of that- that might put a spanner in the works. Does anyone know the rules on this??

MissShoes

cydney65 wrote: »

Hi,

I transferred £5,000 to my partner's low interest card in march. It is now down to £1,400 and I am hoping to clear it by jan 2010. I was very reluctant at first to do this, but have found that the embarrassment of using her credit has been a fantastic incentive for paying it off. It has also made me face up to my appalling money habits. So, I would say yes it's a good idea.

Good luck and best wishes

CydneyX

Thanks Cydney. I hope that this would work that way as well. It would also allow me to put some money each month into savings, albeit only a small amount, which isn't something I've ever managed before. That would provide me with some security at least. I'm aiming to be DF by Dec 2010 which allows me 14 months. This would finally be achievable if I could do this.

This not to mention the other huge, invaluable reward of finally the damage I've done to my credit rating would possibly be stopped and I could begin to improve it (I have only 1 card in my possession which has a credit limit of 200 and I pay off in full each month. I just use it for groceries, fuel etc).

Actually I'd appreciate words of wisdom on this. Does it matter what card it is if you pay it off in full in each month? The card in question is a Capital One card. It says platinum on it but they wrote to me last week saying all the APRs are going up to 26.9, 24.9 etc. Would it damage my credit rating to have the only credit in my name being a relativity bad deal? Not that I think I could get anything else!

LBG_worker

Despite popular belief most major credit card companies will let you transfer from who ever! credit card companies don't really care that you are taking on someones debt as long as the person understands that they are responsible for that persons debt. It wont damage your credit rating if the only card you have is a 'bad deal' in fact shifting your debts into someone else name will enhance your credit rating as tecnically according to the lender you have less financial commitments.

Mozette

MissShoes wrote: »

I haven't even thought of that- that might put a spanner in the works. Does anyone know the rules on this??

No problem so long as the card providers aren't the same. So if you both have MBNA for example, you couldn't, but not being in your name is not a problem.

Tixy

Hi MissShoes

Another thing to consider before you switch your debt into someone else's name iswhat would happen if your financial situation changed significantly, eg if you lost your job or were ill. Can the family member afford to make the minimum repayments on your behalf if you were unable to.

If you had to suddenly start making token payments or reduced payments your other creditors would be less likely to accept the situation if you continued to make full payments to this debt. If you didn't make full payments and your relative could not then you would be damaging their credit rating.

There are a lot of people who end up in a difficult situation who have posted on this board from doing what your relatives suggests.

I'm not saying don't do it - just think carefully about it and consider the whaitifs.

rheme

You would also need to make provision in some way that if something happened to you (god forbid you passed away) the family member is legally responsible for your debt, as it is in their name, and some means of paying the debt off is provided.

They are legally responsible for it (dead or alive) but at least alive you have the ability to pay it off.

Apologies for being so morbid .... but everything needs to be taken into account.

I put my DS's student debt onto a % credit card in my name when he finished his degree and between the two of us we cleared it. I did ask him at the time not to 'pop his clogs' as that would leave me responsible for all the debt.