Elderly dad's credit card habit

arse_neck

Hello everyone,

I'm trying to lead my 71-year-old father out of a financial meltdown. He's never been great with money, and always spent beyond his means, and three years ago I thought I'd helped him sort out his finances after his marriage broke down. I got him to pay off high-rate CCs and thought he was bringing the rest under control. He's an adult, so I foolishly thought he could be trusted to carry on paying off his debts off.

Turns out that wasn't the case. He's been in tears asking to borrow money from me (I've loaned him £1,000, which I know I will get back), and now I've insisted on seeing his finances, it's become apparent he has nearly £9,000 in credit card debt. All of it the full-fat high-rate stuff, as he's a pensioner who can't get the juicy 0% deals.

When I say he's a pensioner, he's hardly destitute. He was a headteacher, so now brings in £2,800 a month through his various pensions. And his mortgage is paid off. Yet depressingly, he doesn't seem to have anything to show for all this debt.

But that's not why I'm posting here. I'm mainly after advice on what to do. I'm sure many of you will tell me I'm a fool for loaning him any cash, but he's my dad! I know I'll get it back, and it wasn't earning much in a savings account!

So should I push him towards a loan with his bank (as low-rate credit cards and loans seem a non starter according to MSE's availability checker)? Barclays is offering 4.9%, which seems better value than the 20% I suspect he's being charged at the moment. And what do I do to stop him getting any more credit cards? Any tips on getting him to stick to a budget?

Thanks in advance for any tips,

Stuart

Ben8282

I would suggest a loan from his bank to repay this. His income level would appear sufficient especially as presumably he pays no rent mortgage. The fact that he is a pensioner would not stop him getting the 'juicy 0% deals'. The thing stopping him getting those is his poor credit history.

Dobbibill

He has a decent income, I think he needs to complete a SOA with you.
Make sure you include the repayments for the loan you have given him in his budget. He has to take responsibility for that.

Maybe look at setting him up with a separate account for his spending money each month funding by SO each month/week from his main account. This may help him stick to a budget although ultimately that will be up to him. You cannot physically stop him from applying for more credit although he may not be able to now due to his credit history.

Don't assume he will be eligible for a loan, or that it will be at a cheaper rate. If he isn't eligible for either, just make sure he is paying more than the minimum payments each month and after time his current credit cards may offer BT deals to allow a little bit of shuffling.

Ask him to hand over any credit cards he currently has to you, so he cannot spend on them further.

TartanSaver

Forgive my confusion - why does someone earning £2800 a month have trouble servicing £9000 of credit card debt? Even at an average of 30% (unlikely, most cards are lower than that), that's only £225 a month in interest. Minimum repayments are usually 1-2.5% of balance. Even 3% on £9000 only takes you to a grand total of £495/mo, easily affordable on £2800 with no mortgage.

Don't misunderstand me, clearly you want to help your dad out of this situation and improve his finances, and that's a good thing. But I can't see why he should need to take crisis loans from family members to service a debt that's costing him well under a fifth of his very considerable pension with no housing costs to pay.

Are you sure there's not more to this story? I think you want sitting down with him to look over his bank statements and find out exactly where all the money is going - not just the credit card statements, but work out every penny that's leaving his current account, and what for.

Getting terrible offers on the MSE checker suggests he's been defaulting on his cards. Lenders like people who borrow lots of money and only ever service the interest - they make them more money - so simply having the cards is not enough to trash his credit record. Help him to order credit reports from all three agencies - sign up for Noddle for free reports from Callcredit and then pay £2 each for statutory reports from Equifax and Experian. If he's not been racking up defaults, you might want to reasses your thinking that balance transfer offers are a non-starter. Even if there's a 3% BT fee, the savings in two months will easily wipe that out. If he has been defaulting, get it sorted pronto.

The bank loan option isn't terrible, but make sure you cancel all the cards if you go down that route.

CalumHeath

I have to agree with Tartan saver.

If he has an income of £2,800 per month yet has accrued £9,000 of debt (which he is seemingly struggling to repay), his money has to be going somewhere - you need to find out where.

Dobbibill

The only thing I would add to the above comments is that he can get the Equifax report free from Clearscore. If any of his cards are Barclaycard, he will also be able to get his Experian report as they are doing a free access offer, he will need to log into the online account to see/activate it, plus having Noddle free for Call credit means it will cost him very little to get all 3 CRA reports.

margaretclare

As someone who successfully turned her finances around a few years ago.....

DH and I are pensioners on a 'decent income' between us. We do use our credit cards, but we pay off each month. We're the kind of credit-worthy people the lenders don't much like!

If your Dad lives alone, has no mortgage, the question has to be: what is he spending on? He could pay off that £9K debt, but would it just climb back up again? I think that's the question you have to ask him.

A former head teacher in tears? That, I have to see. Seriously though, I can understand your concern. And a possible reason why his marriage broke up.

Yes, a bank loan would pay off the £9K at lower interest, but there are more basic questions to answer.

Paul_1977

My father was/is in the same position, but owes nearer £30,000.

He went to here:

http://www.stepchange.org

They sorted out it all into one monthly payment. It was a bit of a bumpy start but his paying off slowly.

He closed all of his CC accounts, I even found one still open and it was closed.

When parents ask for money its hard to say no, I have lent many thousands in the past. I am very good with money, so thankfully its not passed on to me!!!!!

Some people just cannot handle money. Saving is alien to him.

What your dad does have is his property? my father has nothing to show at all.

Around 10 years ago he had to get out of £70,000 debt and the house was sold. Had he not got into debt he now would have owned a house in London, worth FOUR times more than what he would have paid. But what the hell, thats life!!!!!!

tomtontom

As well as completing an SOA, I'd be asking to look at where this spending is going. Could there be a bigger issue here, perhaps gambling, or is someone manipulating him in some way? The debt doesn't make sense with his level of income, so I'd gently try and find out if there is something else bothering him.

patanne

I'm not sure that consolidating the debt is such a good idea unless you have some way of making sure he won't run up the debt again. The number of DFW diaries on here that have done just that and had to start all over again with even more debt. The bank won't see it as getting a loan of £9k, they will see it as him then being in debt for £18k and can he pay THAT amount off.

£9k should be quite manageable once he has figured out where his overspending is being done (& stopped it). As suggested above a SOA should help.

Robin9

Do have a look at his Bank Statement - a friend of mine had dozens of standing orders of £5, £10 a month to various good causes.