Assuming a Partner's Credit Card Debt...via Balance Transfer?

[Deactivated] on 28/11/2018 - 13:43
Last edited 28/11/2018 - 14:55

So, basically, my girlfriend put a lot of purchases on my credit card, that didn't seem to be an issue at the time however she's not able to pay it off particular quickly and my interest is starting to rack up, and we've agreed it shouldn't really be my problem since I can't pay it off for her myself either (please don't bother commenting on how dumb the situation is - I'm aware).

We've been considering a balance transfer from my card to a new card for her, however she is of the belief that a $3000 debt will destroy her credit rating, and thinks she won't get approved for it anyway (works full time hours as a contractor, minimal savings) and will only destroy her credit rating in attempting to apply.

Is this a viable solution at all? If so, could anyone point me in the right direction? She recently applied for a low-rate credit card from commbank and was denied before she even got to input her credit limit.

EDIT: it's not the case that she ran off with my credit card and spent a heap of money, it was her half of 2 holidays we went on (one of which was for a family wedding) that at the time she couldn't fully afford, but has made some effort to pay it back already. I really don't need relationship advice here guys. I know this is dumb.

EDIT 2: Seems the safest option is to apply for a personal loan. Does anyone have any recommendations of banks or packages for this situation?

Financial Credit Card

Comments

  • tomsco on 28/11/2018 - 13:54

    (works full time hours as a contractor, minimal savings)

    I don't think they're as concerned with savings - they'd prefer to see a steady income. Obviously being a contractor instead of an employee could hamper this, but I wouldn't expect it to necessarily auto decline. Does she have any other debt/negative credit history?

  • samfisher5986 on 28/11/2018 - 13:55
    +4

    Sounds like she doesn't want the debt.

    I don't see any credit rating or approval issue from what you've said.

    • charng on 01/12/2018 - 16:38

      that is what i thought. outstanding debts don't affect your credit ratings. defaults do.

  • wannagrababargain on 28/11/2018 - 13:59
    +4

    I wonder how many other credit cards she has that she hasn't told you about? =/ Whatever plan you come up with it should include her not having access to any credit card for now (hers or yours).

    • [Deactivated] on 28/11/2018 - 14:13

      She has none.

      • jsb on 29/11/2018 - 09:00

        Are you sure. If the previous application to comm bank was auto declined, there could be something wrong in the credit report. Have you checked the credit score?

  • HighAndDry on 28/11/2018 - 14:04
    +3

    Is this a viable solution at all?

    Possibly, but I feel like you're side-stepping the real problem which isn't a financial one as much as it is a relationship one: You're dating someone with apparently zero financial responsibility, from making purchases she can't pay off, to refusing to repay people she effectively borrowed money from. (And who doesn't respect your credit rating and financial stability, much less her own).

    Also, did she ask before putting those purchases on your card? Because:

    however she is of the belief that a $3000 debt will destroy her credit rating

    You know what will destroy her credit rating much faster? Being convicted of credit card fraud. Plus, a $3,000 credit card balance won't "destroy" her credit raiting, it'll accurately reflect what her credit rating should be.

    But if you want to just focus on the immediate question:

    and thinks she won't get approved for it anyway

    For a credit card with a measly $3,000 credit limit? Even in the current climate you'd have to be basically bankrupt or homeless to be declined for this.

    • [Deactivated] on 28/11/2018 - 14:16

      She did, yeah, I knew about it, but we've acknowledged she won't be able to pay it all off particularly quickly, so it's fairer that the debt is in her name rather than mine. I'm not so much looking for relationship advice as I am looking for advice on how to make this debt not my problem anymore.

      • HighAndDry on 28/11/2018 - 14:18
        +4

        I am looking for advice on how to make this debt not my problem anymore.

        I'll only persist with this line of discussion one more comment and stop, but: your problem isn't just this debt, it's the source of the debt.

        In any case, to answer your question, has she considered, instead of a credit card she can't pay off, a personal loan? It would be even easier to be approved for, will have lower interest rates (given she can't pay it off within any interest-free period for the credit card anyway) AND, more importantly, she can't rack up more debt on a personal loan as opposed to an extra credit card.

        • [Deactivated] on 28/11/2018 - 14:20

          We did discuss personal loans, how easy are they to get approved? She genuinely believes she won't get approved for basically anything and that personal loans would be really hard to get.

          • HighAndDry on 28/11/2018 - 14:24
            +1

            @[Deactivated]: For a $3,000 personal loan to pay off existing debt (as opposed to just more spending)? Not that difficult. The only complication may be that she's technically paying off your credit card debt, and that might require speaking to someone in the bank in person a little more to explain the situation.

            But - while credit applications can affect credit rating, especially if it's declined - you can go into a branch and speak to someone (and give them all the relevant details, numbers (expenses, income, etc)), and get an indication of whether she's likely to be approved or not before deciding whether or not to actually apply.

            • [Deactivated] on 28/11/2018 - 14:25

              @HighAndDry: Thanks for the advice, I appreciate it. If she applied for a personal loan online would she even have to indicate it's to pay off someone else's debt though? If it's so simple/low, would the intention matter?

              • HighAndDry on 28/11/2018 - 14:27

                @[Deactivated]: I think there is usually a field that says: "Purpose of loan" that needs to be filled out. That may (don't work in a bank, don't know for sure) affect how likely it is to be approved. But an online application will be an actual application with credit-rating consequences if it's declined, and this particular situation is unique enough I wouldn't trust an automatic system with it to have the best chance.

                The process is simple, and it shouldn't be difficult to get approved, but "simple" is not exactly the same as "easy", if that makes sense.

              • wannagrababargain on 28/11/2018 - 14:33
                +2

                @[Deactivated]: Debt consolidation is a legit purpose for a personal loan.. An unsecured personal loan can basically be used for anything you like. They ask the question to make sure they've done the due dilligence to check that you're not doing anything illegal with the money.

                I would shop around hard for a personal loan if you go down that route. $3k is a bit of a low amount for a personal loan as generally they have establishment fees and the idea is it's a fixed monthly repayment. See if you can shop around for some promo deals with waived fees etc.

                PS. I think a personal loan is better than a balance transfer in this situation as it's structured around that idea of a monthly payment and they'll come after you if you miss a payment. The risk with a credit card balance transfer (though potentially the cheapest option) is they don't care if you don't pay more than the 2% minimum each month so you could end up in the same situation in 6 or 12 months down the track if not disciplined enough.

                • [Deactivated] on 28/11/2018 - 14:39

                  @wannagrababargain: Thanks for this. however, are balance transfer offers for credit cards not an easy option? especially given those tend to have interest fee periods for the transferred balance

                  • HighAndDry on 28/11/2018 - 14:42
                    +3

                    @[Deactivated]: Don't quote me, but personal loans are generally easier to get than credit cards (for the same credit limit/amount), and you've already said she has no hope of paying this debt off within the interest-free period anyway. And I wouldn't risk it even if she has a chance, because CC rates are obscene.

                    Plus: There's the additional issue (which is still financial, so don't flame me) of giving someone who has proven problems with financial responsibility an additional source of credit.

                    • [Deactivated] on 28/11/2018 - 14:46

                      @HighAndDry: 'you've already said she has no hope of paying this debt off within the interest-free period anyway"

                      I didn't…and if I did say that I did not mean that at all…

                      But yeah, you're right about the extra credit card issue. Personal loan probably is safer.

                      • HighAndDry on 28/11/2018 - 14:48

                        @[Deactivated]:

                        I didn't…and if I did say that I did not mean that at all…

                        My bad, might've misread.

                  • wannagrababargain on 28/11/2018 - 14:58

                    @[Deactivated]: I was just saying there's a risk vs reward in everything. I already assumed you wanted to take advantage of a free interest balance transfer offer..the 'reward' being that you pay no interest if you pay it off in time but the risk being a huge amount of interest later if you don't. The risk is made more likely to occur given there's little incentive to pay off the balance when you only HAVE to pay back 2% each month rather than an ammortised amount.

                    On the other hand the risk of a personal loan is less as you are sent a bill each month for a fixed monthly ammortised payment. You know exactly what it's going to cost you in the end, so that variation risk is gone but it is potentially less rewarding than a balance transfer trick.

                    If you think you can be disciplined enough to force yourself to repay $3000/12 each and every month then balance transfer would be a good option. The bank is counting on you not being disciplined enough for that :)

                • HighAndDry on 28/11/2018 - 14:46
                  +1

                  @wannagrababargain:

                  They ask the question to make sure they've done the due dilligence to check that you're not doing anything illegal with the money.

                  Also, from a lender perspective, someone repaying an existing loan is at least demonstrating some modicum of financial responsibility - someone borrowing money for frivolous spending presents a much higher credit risk.

                  • [Deactivated] on 28/11/2018 - 14:54

                    @HighAndDry: Again, thanks for the help. Final question, any personal loan packages in particular you'd recommend? :P

                    • HighAndDry on 28/11/2018 - 15:07
                      +1

                      @[Deactivated]: Sorry no, that kind of detail is something I'm useless at helping with.

              • Love a bargain on 29/11/2018 - 16:36

                @[Deactivated]: It's not like she's paying off your credit card debt, but that she's paying off her debt to you.

        • AdosHouse on 28/11/2018 - 16:39

          Pretty sure most banks won't give you a loan for $3k, most have a minimum, with Credit Cards filling the gap.

          Banks will make SFA interest on a $3k loan, more money in it for them to charge you 20% on a CC.

          • Waffles on 29/11/2018 - 07:30

            @AdosHouse: Throwing in something that might help based on an earlier comment: I was once declined for a credit card via online application. I called them up and talked through it. It turned out to be an error on my credit report (so not really an issue of paying it back) but anyway they were able to change the decline to an approval without the decline showing up on my report.

            Basically. If you get a decline online don't just leave it there

  • [Deactivated] on 28/11/2018 - 14:15
    -3

    the situation is dumb

    • [Deactivated] on 28/11/2018 - 14:16
      +1

      I'm aware.

      • [Deactivated] on 28/11/2018 - 14:18
        +1

        on a serious note, be happy she hasn't dumped you to get away from the debt. i know someone who was in a long term relationship who ended up stuck with about 20k debt after the relationship ended

        edit: to be fair, their relationship broke up from infidelity, not because of the debt, but the end result is what matters

        • HighAndDry on 28/11/2018 - 14:19
          +2

          On a cynical note,

          be happy she hasn't dumped you to get away from the debt.

          That might work out cheaper for OP in the long run.

        • [Deactivated] on 28/11/2018 - 14:19

          There are a million personal and contextual details I could have added to avoid all the advice people want to give me and further explain the situation but really I'd rather I just got help with the financial aspect…

          • [Deactivated] on 28/11/2018 - 14:21
            +1

            @[Deactivated]: if you want financial advice, look for a person loan rather than a credit card, that way she can't just re-spend the money when she pays some of it off

          • anastasiastarz on 07/12/2018 - 03:53
            +1

            @[Deactivated]: Should have just said friend then ;)

  • wannagrababargain on 28/11/2018 - 14:22

    What about one of those peer to peer lending services? ratesetter.com.au ?

    • [Deactivated] on 28/11/2018 - 14:23

      From what I know, the interest rates on those are terrible

    • HighAndDry on 28/11/2018 - 14:25

      NO! Those are terrible for basically everyone involved.

      • wannagrababargain on 28/11/2018 - 14:34

        Surely not any worse crooks then the banks?

        • HighAndDry on 28/11/2018 - 14:41

          That's probably subjective, but they charge higher rates, have less attachment to public image (especially in the wake of the Royal Commission), and are far less stringently regulated.

        • miicah on 28/11/2018 - 16:51

          They often have 60% interest rates

  • boomramada on 28/11/2018 - 14:33

    Talk to the bank. Get a personal loan and destroy her CC. This rate, getting negative credit rating her least issue.

  • pantsparty on 28/11/2018 - 15:02

    $3,000 isn't a large amount. Out of curiosity why can't she save some money each month and start paying the debt down? Or does she have no money left each month after getting paid and paying rent/mortgage/bills?

    • [Deactivated] on 28/11/2018 - 15:15

      The latter. It was much less but then we had to go on a trip with my family, so the debt went up, and other expenses are preventing her from making a sizeable dent in it as fast as I would like. And entry level jobs with Sydney rent and expenses don't leave much wiggle room.

      • samfisher5986 on 29/11/2018 - 10:39

        Is she working time and trying hard to reduce her costs?

        It might be possible she is not taking the debt seriously as its not in her name.

        As mentioned $3000 is not much to pay off, even if you work minimum wage.

  • sparkles on 28/11/2018 - 15:47
    +3

    She needs to get her credit report. And show you. There is probably something on there she's not telling you if she is being declined or is convinced she'll be declined for literally everything. She may have defaulted on debt in the past or still owe debt you don't know about.

  • Tightpocket on 28/11/2018 - 16:28

    Get a personal loan from the bank that provided you with the credit card..its probably gonna cost you more in fees and in interest but you'll have a better chance in securing one.

    Usually they don't require any documentation since they can already see your income/expenses so if your bank can't get you this personal loan..it's probably better not to keep reapplying as it can hurt your credit rating. you'd be better off finding some other avenue like selling stuff you don't need online.

    Double shift, uber, whatever..its only 3K you won't be doing it for too long if you have to.

  • afah0447 on 29/11/2018 - 09:17
    +1

    Such a small amount of debt ($3k) will not adversely affect her credit rating that much. Unless there are some skeletons she has not informed you about.

    Get a balance transfer with 0% interest rate, then cut the card in half when you get it in the mail. There are many on offer outside the big banks. Try CUA and Police Bank.

  • Love a bargain on 29/11/2018 - 16:48
    1. Check credit report (with the various agencies - they all have different databases and different credit scores for the same person)
    2. Enquire why she was denied by Comm Bank
    3. Getting a credit card with 12 months interest free might be a good idea although you will have to ask the bank if they can do a balance transfer from your card to her card. However, she has to commit to saving enough many to pay the entire amount off within that 12 month period (or else the interest rate will be so much higher afterwards and the debt will rack up again) - or refinance before the end of the interest free period. I think she also has to commit to not using the card. (I believe that as long as you've overdue payment on a credit card, the bank will immediate charge interest on any additional spending from the transaction date.)
  • gidxg03 on 29/03/2019 - 20:26

    OP my advice is to do 2 things which are both connected:

    1. Get a woolworths 0% interest on balance transfer with no transfer fee for 14 months.

    2. Read the barefoot investor to learn how to pay off this debt and manage your finances into the future

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