Clearing a relative's credit card debts!

gerardflanagan

I'm trying to clear a relative's credit card debts. She owes £4500 on an RBS card, £2500 on an M&S card and £2000 on an MBNA card. She had minimum payments set up on direct debit and they failed so they have been cancelled. So basically she is their perfect customer!

In December she will start receiving enough money that she should be able to pay it off over the next 12 months. Am I right in thinking I should get her to get a 0% balance transfer 12 months+ to take all of that debt and then get her a separate 0% 12 months+ for her to spend on (modestly!). Would she be likely to get both or should I just get her an 'all-rounder'? :money:

chattychappy

If DDs bounced she could have negative markers from both the failed DD and the late payment to the CC. (Not sure exactly what you mean.) But the point is that if her record is less than perfect, it could be tricky to get a decent 0% card.

I agree with your idea, but you'd better consider the emotion of your relative - will more cards just mean more spending? But I like the idea of a "normal" card for spending going forward (pay off each month) and a BT card to clear the existing debt. Pay a fixed amount each month, not just the minimum. If you use a standing order to achieve this make sure the there's plenty of margin with the dates and/or the due-by date doesn't move around. (One missed payment and the deal's off.)

A 12 months on purchases card might not be a great idea as it might discourage living within her means month-by-month.

ihateyes

gerardflanagan wrote: »

I'm trying to clear a relative's credit card debts. She owes £4500 on an RBS card, £2500 on an M&S card and £2000 on an MBNA card. She had minimum payments set up on direct debit and they failed so they have been cancelled. So basically she is their perfect customer!

In December she will start receiving enough money that she should be able to pay it off over the next 12 months. Am I right in thinking I should get her to get a 0% balance transfer 12 months+ to take all of that debt and then get her a separate 0% 12 months+ for her to spend on (modestly!). Would she be likely to get both or should I just get her an 'all-rounder'? :money:

with the 3 cards yor friend has, i doubt she would get much of a credit limit on a new card

chattychappy

ihateyes wrote: »

with the 3 cards yor friend has, i doubt she would get much of a credit limit on a new card

I probably agree. It does come down to the existing state of the credit history and current income. I've had no problems getting further cards with much higher borrowings than that. But it does seem that the OP's relative is under strain, so perhaps the ratio is not good.

opinions4u

I woud suggest not getting her a credit card at all. Remove the potential for her to build up a new debt and focus on paying down the existing debts and changing her spending behaviour for good.

In other words, pay the minimum payment plus £1 on all the cards. Throw everything else by way of spare cash at the highest rate card.

gerardflanagan

Thanks for the replies. She is a retired doctor so while she has a poor credit rating I assume she also has a decent credit rating in terms of income.

chattychappy wrote: »

If DDs bounced she could have negative markers from both the failed DD and the late payment to the CC. (Not sure exactly what you mean.)

Yes, this is basically what has happened.

Regarding keeping her from spending, I'm going to attempt to give her a budget limit that she can spend every month, after paying her debts. I fully agree that it may be hard to make her stick to it but if she is going to fail isn't she better failing on a 0% purchases card?!

I'm still tempted by getting a 0% balance transfer and a 0% purchases card. If she didn't get them and it damaged her credit rating it couldn't get any worse right?!