£2m in Interest through Persistent Debt

ObsidianRougue

Hi,

Apologies if this is not the correct forum etiquette, but I wanted to raise the story of my sister with regards to persistent credit card debt.

She was lucky enough to be given a final salary pension in her 50’s, she’s now in her 70’s. Over the last 20+ years, she’s always been stressed about money which I couldn't work out (although she is one of the most generous people I’ve ever met).

As it turns out, she’s been paying the minimum repayment on various credit cards for the last 20+ years. With the principle debt never decreasing. With some of these APRs of 30%! All of her pension has been spent paying the interest. 

I did a rough calculation and I think she’s paid about £2m (yes, that’s two million) in interest without the debt ever going down.

{UPDATE: Thanks everyone. Sorry, I should have said. Her final salary pension was £115K pa. Vast majority of which went on interest payments. }

I am about to release whatever equity I have in my property to pay everything off, but it just feels wrong that the banks have done this for such a long time. I know that she should have been more aware, but it’s a story worth sharing.

I hope none of your families have been affected by this.

Stay Safe.

afis1904

You should think twice about doing an equity release of your property to pay down someone else's debt. Have you or your sister talked to debt charities like Stepchange? They might be able to point you into a direction that's better for both of you.

pcman1985

I seriously doubt that it is over £2 million in interest? That would work out at over £8,000 a month just on interest. Plus at the same time she'd have to pay extra to meet the minimum payments. She'd need to receive well over 100K a year to manage these payments as well as other living costs.

If she can no longer pay these amounts she would need to default and set up affordable payment plans. However it would severely affect her credit history.

Do not release equity from your property.

[Deleted User]

ObsidianRougue said:

I did a rough calculation and I think she’s paid about £2m (yes, that’s two million) in interest without the debt ever going down.

That means she was carrying an average balance of at least £400,000 every month.

She needs to get to the DFW boards and try to cut some costs. Perhaps reduce the Sky package and buy a cheaper brand of baked beans?

foxy-stoat

ObsidianRougue said:

Hi,

Apologies if this is not the correct forum etiquette, but I wanted to raise the story of my sister with regards to persistent credit card debt.

She was lucky enough to be given a final salary pension in her 50’s, she’s now in her 70’s. Over the last 20+ years, she’s always been stressed about money which I couldn't work out (although she is one of the most generous people I’ve ever met).

As it turns out, she’s been paying the minimum repayment on various credit cards for the last 20+ years. With the principle debt never decreasing. With some of these APRs of 30%! All of her pension has been spent paying the interest. 

I did a rough calculation and I think she’s paid about £2m (yes, that’s two million) in interest without the debt ever going down.

I am about to release whatever equity I have in my property to pay everything off, but it just feels wrong that the banks have done this for such a long time. I know that she should have been more aware, but it’s a story worth sharing.

I hope none of your families have been affected by this.

Stay Safe.

Half term is nearly over and we can go back to being gridlocked on the roads again.

Malkytheheed

Your rough calculation is wrong. Very very wrong. 

born_again

>>With the principle debt never decreasing<<
Even minimum payments clear some of the debt. So unless you keep spending. Your debt will go down albeit very slowly.

Even school kids should know this....


 

ObsidianRougue

Thanks everyone. Sorry, I should have said. Her final salary pension was £115K pa. Vast majority of which went on interest payments. 

phillw

ObsidianRougue said:

Thanks everyone. Sorry, I should have said. Her final salary pension was £115K pa. Vast majority of which went on interest payments. 

Can she sell any of the things she bought for £300k?

ObsidianRougue

phillw said:

ObsidianRougue said:

Thanks everyone. Sorry, I should have said. Her final salary pension was £115K pa. Vast majority of which went on interest payments. 

Can she sell any of the things she bought for £300k?

Hahaha. Probably not. It was spent on cancer treatment for her mother.

ToxicWomble

Which  doesn’t cost a penny under the NHS ... try again
 Would love to know what she did for a living that gives a final pension of £115k  a year in her 50s yet she has zero grasp of finances.

you aren’t convincing anyone with this fairy tale sorry