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# Can anyone help me with this calculation?

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Posts: 848 Forumite
I’m trying to help a friend with her finances

First of all, a bit of background

My friends husband was self employed/running his own business and about a year ago he asked her to take a out a loan to buy some substantial things for his work, saying that he would be able to right it off from tax and would pay her back as soon as he could. Later in the year she found out (through a friend!!!) that he was in a terrible financial situation and had already liquidated his company. He has since disappeared and all that we know is that he’s living somewhere in London with a girl who has only just celebrated her 21st birthday!!!

Anyway he’s left her paying rent for a house at £650 a month, plus bills and about £5000 of credit card debt.

The one card that I’m particularly concerned about has a debt of around £3600 and in April she received a letter telling her that the interest would be going up to 29.9%APR. The minimum monthly repayments have stayed the same at £100 for some time. I’m not very good with maths and percentage rates. Can anyone tell me roughly what she is actually paying off this debt each month (if anything) and/or how long it would take her to pay it off at this rate.

The other card debts are at a much lower rate and would be manageable if she could just reduce some of this debt.

I have already told her to try a balance transfer. Unfortunately she has been left with such a bad credit rating that no card will take her on.

• Posts: 31,455 Forumite
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Hi

Having put the figures into the snowball calculator here http://www.whatsthecost.com/snowball.aspx
if she continues to pay £100 per month, it will take her 85months (just over 7years) to clear the debt and she will pay interest of £4873 by the time it is paid off.
At the moment the interest is going to be just under £90 per month, so she is really just paying off about £10 per month.
(thats assuming that she doesn't have PPI on the card that is, if she does the balance could actually be increasing - worth double checking).

When you get a letter telling you about an interest rate rise youhave the option to 'opt-out' and to continue paying the same amount each month at the old interest rate (they do stop the card so it can no longer be used).
You officially have 30days from the date of notice to tell the card company that you want to opt-out, however if she has not used the card for any purchases since April it might be worth contacting them and asking if they would consider doing it at this late stage and dropping back to the old rate (they don't have to but others have had this work for them).

Here is an article about opting out - http://www.moneysavingexpert.com/reclaim/credit-card-interest-rate-increases

If your friend is really struggling and cannot keep up with all the repayments and essential living costs then she might want to consider getting some advice from the debt free wannabe board. She'll be asked to complete a statement of affairs http://www.makesenseofcards.com/soacalc.html (which might be useful to her anyway to help her get control of her finances and see whether she can manage).
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• Posts: 848 Forumite
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Thank you Tixy!!! That's a really useful calculator too

I will go through it all with her tonight. She used to be really good with money and it's been getting her down.
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