Helping a friend with C/C's - Where to start?

Any

Hot_Potato wrote: »

CannyJock - please can you explain what you mean by 'Once the Barclaycards are clear, they become potential candidates for 6.9% LOB offers.'

Some cards are great on repeat offers (ie you don't have to apply for new card to get special offer).

These special offers are only good if your balance is 0 as most cards always clear the cheapest debt first (ie you will be just clearing the new debt under the special offer, while your interest on the old balance will be still adding up)

Barclaycard is one of these - for balance transfers over £5k they offer 6.9% Life of balance offer with 2,5% balance transfer fee.

CannyJock

Any wrote: »

Barclaycard is one of these - for balance transfers over £5k they offer 6.9% Life of balance offer with 2,5% balance transfer fee.

Up to 5K

Idea is to clear the Barclaycard. Once you get a nil balance statement on one of the Barclaycards, you then ask for a BT and transfer some of the high APR debt back onto the Barclaycard for a 6.9% LOB deal.

Another 2K overdraft? She needs to check her credit report to see what else it uncovers.

An 8% loan to clear an overdraft isn't the way to go.

EDIT: M&S and John Lewis can be used anywhere. What she should do is take one of the cards and get it down to a zero balance to prevent interest. Then use it for purchases she can afford to repay in full when the statement in. That should be drawings a line under increasing her debt.

EDIT EDIT: For the record, you've got more patience than I have I don't have a lot of patience for people who have no interest for helping themselves - nothing worse that wasting your time and effort when the person who will benefit from it doesn't give a damn.

JA1000

izools wrote: »

I'm sorry but if she has a £67,000 bond she should use that to clear these debts totally and use the income she would otherwise be using for interest payments on these cards to go into a high interest ISA and rebuild from there.

What's the point in having £67,000 earning no more than 5% APR when you are paying four to five times that on your debts? It's absolutely non sensical and a very financially inept thing to do.

Sure, using her other income to pay these a bit at a time means she will have the £67K still to one side, but she can't afford even the minimum repayments withuot chipping into her bond, can she? And the amount that these debts will cost out of her bond over a long period of time will amount to a lot more than if she used what capital she has to clear the debt now and use her new monthly surplus to rebuild an ISA / Investment ISA.


I'll simplify:

Debt: Circa £25,000
Average APR: Circa 20% APR
Interest Charged on £25,000 @ 20% APR every month: £415

Capital of £67,000
Recieving interest of 5% APR = £279 Interest every month

Reducing capital to £42,000

Saves £415 in interest payments to creditors each month, but looses £175 in interest payments on the capital each month.

Ergo clearing her debt would be benefiting her to the tune of at least £240 every month in regards to Net Capital.

You came on asking for advice - this post tells you how to sort it in one swoop, be careful of any redemption penalties on the bond but this will not even out weight the interest being charged.

If you cannot get this simple message across then walk away but before you do mention the fact that the bayliffs will come knocking along with the numerous calls and letters from the card companies will start and be non stop day and night.

This is being cruel to be kind but this message might convince her. She is just under the illusion that £67k is more than £42k but in reality it isn't.

She doesn't have the money to continue as she is but it sounds like there will be some more to come.

Any

CannyJock wrote: »

Up to 5K

My Barclaycard says "0% up to £5k anything over that 6.9% LOB".
Remember it very well, did a BT just on Friday:D

CannyJock

Any wrote: »

My Barclaycard says "0% up to £5k anything over that 6.9% LOB".
Remember it very well, did a BT just on Friday:D

Not come across that one before, very good offer for shuffling actual debt.

Sounds like a special offer - their standard BT limits for existing customers are only 5K http://www.barclaycard.co.uk/personal-home/cards/balance-transfer/index.html

Any

CannyJock wrote: »

Not come across that one before, very good offer for shuffling actual debt.

Sounds like a special offer - their standard BT limits for existing customers are only 5K http://www.barclaycard.co.uk/personal-home/cards/balance-transfer/index.html

That might be it. I am new customer.

Hot_Potato

Thank you again everyone. I just hope what I have done to date (if I walk away) hasn't put her in a worse off place!? Once her Mother dies,she'll be fine, but I can't beleive that she is happy to continue the way she is until that time...

Any

Hot_Potato wrote: »

Thank you again everyone. I just hope what I have done to date (if I walk away) hasn't put her in a worse off place!? Once her Mother dies,she'll be fine, but I can't beleive that she is happy to continue the way she is until that time...

Obviously I don't know the ins and outs of her life, but relying on someone to die and leave big inheritance is very dangerous way to go...

Because she might not even have that much cash (older generation middle class think it's rude to talk about money even in family and the children quite often find themselves in a bit of a shock once they find out that the inheritance is not what they thought it will be) or might be in a trust or might even go several ways with largest proportion to grand children, nieces, dogs or charities...

CannyJock

Hot_Potato wrote: »

Once her Mother dies,she'll be fine

You think? She won't use the £67K bond to clear her debts, and then top up her savings from her mum's estate. But you think she'll use the estate to clear the debts? My money says she'll maybe use the estate to make the minimum payments as she's been doing all along, and continue on utterly clueless, paying interest and feeding the profits of the credit card companies.

Hot_Potato

CannyJock - I think you are probably right. She seems happy to pay a minimum payment each month so long as it isn't 'too much'... She takes no notice/doesn't understand about %'s.

She's now putting her house on the market. It's been valued at £850k, her life time mortgage is just under £300k, and she's looking to buy somewhere for £400k... but in the meantime is pleading poverty to all around her because she hasn't got enough money to live on!