Paying off debt

V_and_M

Dear forum friends,

My partner has £50,000 of credit card debt, most of it due to visiting his mother in the States and spending long periods nursing her as she has dementia. He is freelance and makes no money when he is away. We have 7 cards, most of them no longer 0%.

We are renting out our flat and couch surfing to repay the debt, and I am making contributions. We think we can pay off £15,000-20,000 this year.

But we differ about how to manage it. I favour using our current accounts, and not using the credit cards any more. Just focussing on paying them off. My partner would like to continue using the credit cards to build back his credit score, whilst paying off what we spend on the cards, plus making additional repayments to bring the debts down.

Are we essentially paying interest every time we use the credit cards for purchases and direct debits? Or are we improving our credit score by using the cards?

We want to find the best way forward together, so would be so grateful for thoughts on this. 

V and H

Voyager2002

You improve your credit scores by making regular payments and keeping the amount owed within the limits set by the provider. Additional use when you have hefty balances will not really make much difference.

There are sometimes benefits from paying with a credit card (additional consumer protection) but when you are carrying a balance there are extra interest charges, so probably using a card is not worthwhile for most purchases.

I do hope that your lives improve.

born_again

Best bet complete a Statement of Affairs & post it in this section

https://forums.moneysavingexpert.com/categories/debt-free-wannabe

Get unbiased & non judgemental advice on the best way forward. 

Nasqueron

Credit scores are a marketing gimmick, the US system is completely different.

There is no harm using a CC and paying off in full every month say for S75 cover etc but the positives for that for the credit history are dwarfed by the massive debts and interest being paid which are huge negatives

ManyWays

I am assuming you are talking about UK cards, the same may not apply to US cards and US credit scoring is also different.

Are we essentially paying interest every time we use the credit cards for purchases and direct debits?
Yes. Almost all UK cards charge interest from the time of the purchase/regular payment UNLESS you repaid the balance in full each month. You will have to read the T&Cs of each card in detail to see if one of your cards is an exception to this. 

Or are we improving our credit score by using the cards?
Well, you could be paying interest and improving your score. But
(a) that is daftly expensive
(b) providing you have cards which you are making at least the minimum payment to, that is what benefits your score the most. If you have no balances, then spending and then clearing helps your score - but that is a long way off for you. 

The s75 protection only applies for items over £100 and there are more exceptions than you may expect, see https://www.moneysavingexpert.com/reclaim/section75-protect-your-purchases/

It sounds as though you have been lent more than was sensible, if the lenders increased your limits when you were only making minimum payments, you may be able to win an affordability complaint and get a refund of some interest.

MEM62

V_and_M said:

Dear forum friends,

My partner has £50,000 of credit card debt, most of it due to visiting his mother in the States and spending long periods nursing her as she has dementia. My sympathy, that must be tough  He is freelance and makes no money when he is away. We have 7 cards, most of them no longer 0%.

We are renting out our flat and couch surfing to repay the debt, and I am making contributions. We think we can pay off £15,000-20,000 this year.
That is a significant reduction - well done! 
 
But we differ about how to manage it. I favour using our current accounts, and not using the credit cards any more. Just focussing on paying them off. My partner would like to continue using the credit cards to build back his credit score, whilst paying off what we spend on the cards, plus making additional repayments to bring the debts down.
Well that is easy to address, he doesn't have a credit score so he doesn't need to worry about it.  His credit standing will be helped by reducing the debt, which you appear to have a plan for.  You cannot do any more than that.  That said, on the basis that additional borrowing should be the last thing on your mind at the moment, why is he concerned about it?         

Are we essentially paying interest every time we use the credit cards for purchases and direct debits? Or are we improving our credit score by using the cards?
If you use the cards you will be paying extra interest.  Pointless doing that so stop using them until the balances are clear.  Your approach is correct.    

We want to find the best way forward together, so would be so grateful for thoughts on this. 

V and H

Well done for having a plan. I am sure your situation will improve in time.