Paying family members credit card off

[Thomast]

So just today I found out a close family member has a large credit card debt. 
 

they are paying 28-30% interest on this debt, which they can’t afford 

do I pay the debt off and charge them 15% on it?  I make more and they save some 
 

or am I being greedy and just charge them 5-6% which I’d get on a savings account. As it’s family 

just to help them out. 
 

what’s everyone thoughts on this ? 

[James32]

7 minutes ago, Thomast said:

So just today I found out a close family member has a large credit card debt. 
 

they are paying 28-30% interest on this debt, which they can’t afford 

do I pay the debt off and charge them 15% on it?  I make more and they save some 
 

or am I being greedy and just charge them 5-6% which I’d get on a savings account. As it’s family 

just to help them out. 
 

what’s everyone thoughts on this ? 

Here's the thing, what will you do if they can't pay you in a year or so? Nothing destroys family quicker than money owed.

How large is large? Can you afford to half their payments ( this will truly help) and 15% is a bit much for family 😂 I think 5% would be kind..but stress you to think about worst case scenario.

[NGMD]

Their debt.

If they are that silly to rack up a debt then they’ll do it again and expect you to bail them out.

Tough love is needed.

[HonestMoneyGoldSilver]

Depending on the circumstances of the family member and the size of the debts, it may be more beneficial for them to default. One thing we should never allow ourselves or anyone else to do is get caught in a debt-trap. We're already borderline economic wage slaves but to be debt-trapped like China or the USA do to developing nations is a cancer. Sometimes surgery and the pain of recovery is the only option

It's all dependent on their circumstances though and their need for credit. Defaulting is not a trivial matter and takes years to recover from. If there are future credit requirements for mortgages, car leases, etc, then defaulting carries a very high penalty. Defaulting may also impact current and future job prospects. I'd recommend they talk to a debt consolidation company and they can get that interest frozen and all payments rolled into a single monthly payment that's more affordable. That carries less of a penalty than outright default but is still far from ideal

[James32]

[SiCole]

If i am in a long term relationship with someone and you can afford to write it off then yes. If it's your parents then yes as they raised you. Other than that no IMO.

Don't think you will get it back. I am worse than most for a sob story and a big heart and have done it more than once and had to write 20+k off for a family member who didn't appreciate it.

[Thomast]

Thank you for everyone’s opinions, 

he’s a good guy and the father of my niece and nephew. He works 7 days a week trying to solve the problem. But still gets nowhere. 

the only reason for the massive debt is leverage in the crypto craze. Which at the top he was worth a massive amount of money. And it went pop unfortunately. 
 

I think he’s learnt his lesson. They still own there house with equity in it so can’t really go bankrupt 

[Fenlander1]

This is a difficult situation tbh and one many of us have found ourselves in. It is difficult to see a family member in financial difficulties but unless it was totally unavoidable it is a situation they put themselves into.

It is OK to help and it may feel good at the the time of helping but If they do not keep up repayments as James says it can destroy a family as it will put you in a very difficult situation if it goes south.

Ultimately it is a decision only you can make based on relationship, trust ect as for charging interest I can see how this would appear to be the way to go but if you are helping as they are family do you really want to charge them for helping this could only add issues later on, 

I wish you all the best whichever way you decide to go

 

[AOB]

From my past experience, the only way to help rather than loaning and requiring payment which could fall through… and maybe ruin the relationship.

The best ways to help with no expectation or harm on your relationship - would be to help with a detailed budget and/or just make a lump sum payment that you are gifting without any money repaid.

Thats my opinion on these kind a scenario’s.. best of luck whatever you decide sir 👍🏽

[Gordy]

3 hours ago, Thomast said:

So just today I found out a close family member has a large credit card debt. 
 

they are paying 28-30% interest on this debt, which they can’t afford 

do I pay the debt off and charge them 15% on it?  I make more and they save some 
 

or am I being greedy and just charge them 5-6% which I’d get on a savings account. As it’s family 

just to help them out. 
 

what’s everyone thoughts on this ? 

All your choice matey but to ask the question out loud you already know that 15% is too much, I'd hate for a family member to take advantage of me like that if I was in dire financial worries and make extra money out of me.

I'd probably just say 'no' I'd rather default and then work out an arrangement plan with more affordable payments to the credit card company and if you get a few years unable to get credit then so be it, the credit score will sort itself out if they sort themselves out over time, it can be done but takes time

just my opinion mind... you did ask

[James32]

2 hours ago, Thomast said:

Thank you for everyone’s opinions, 

he’s a good guy and the father of my niece and nephew. He works 7 days a week trying to solve the problem. But still gets nowhere. 

the only reason for the massive debt is leverage in the crypto craze. Which at the top he was worth a massive amount of money. And it went pop unfortunately. 
 

I think he’s learnt his lesson. They still own there house with equity in it so can’t really go bankrupt 

Here's my problem, he was worth x at top of market but didn't cash out,, therefore he's a gambler/greedy and his won't have been his first or last time gambling. The next millionaire opportunity is only round the corner. Honestly I can see this going tits up unless he truly sees the error of his ways and is hell bent on change.

[Spyder]

You say he owns his home, or maybe still has a mortgage, why does he not increase the mortgage as that would be a lot cheaper than credit card interest.   

If he was my brother or sister, I would give them the money interest free as I have have done many times. They pay back when they can.  

Always remember, you might need help one day and help is more than just money.

[SiCole]

Also before you do it think about if you have given him the money and then once he is out of debt and is treating the family to luxuries without paying you back. Then there is him feeling like you have one over on him for sorting him out. It soon ruins relationships of even good friends.

Money isn't the root of all evil but mixing it with personal relationships can make it seem that way.

Ask him to seek debt consolidation off credit cards.

[scotwasp]

People who rack up this kind of debt invariably do it again.

if he can give you security then consider it, or if you are prepared to not get paid back then fair enough, but a loan Will almost certainly result in a family rift when he defaults.

does he have anything of value he can sell you with the promise that you will sell him it back when he gets himself sorted.  This would be a better course of action in my opinion.

 

[sixgun]

i have experience of paying off people's debts and lending them money. More often than not i don't see the money again.
This pisses me off when i have done them a good turn.

If i were to be faced with the same situation again i would want something tangible in return, something of equivalent value. Once the debt is paid off they can have whatever back, if they don't pay back then i'll sell whatever or keep it. If they don't have anything of worth, which is likely, then unless you can deal with not getting your money back then turn your back. Claim poverty. 

As already mentioned if they ran up the debt in the first place they will do it again - and you won't get your money back.

[BLOOMMAN101]

16 hours ago, scotwasp said:

People who rack up this kind of debt invariably do it again.

if he can give you security then consider it, or if you are prepared to not get paid back then fair enough, but a loan Will almost certainly result in a family rift when he defaults.

does he have anything of value he can sell you with the promise that you will sell him it back when he gets himself sorted.  This would be a better course of action in my opinion.

 

I did when I was drinking  I'd be wary if there are drink or drugs involved