Your elderly mom may have run up her credit card to limits by using it extensively years ago and might still be groping in the dark for ways to come out of the debt. In such a situation it is natural that you may want to ease her financial worries and relieve her from her debt even if she is not using it anymore.
You may consider transferring your mother’s debt on to a balance transfer card in your name for providing the desired help. This is a nice, kind and very humane gesture but it is also important to know about all the consequences of it and most importantly whether or not you are eligible to do so.
Considering the situation
At first, you will have to consider the situation of the debt, the condition of your mother’s finance and other factors to go ahead with your proposition.
- Consider whether or not she is able to pay the minimum payment for her dues from her retirement or pension.
- Also, see whether or not she is reducing her debt by a considerable margin every month.
- Apart from that consider whether or not you will be allowed to transfer her credit card balance in your name onto a zero interest card and whether in that way she will be actually paying off the balance.
These considerations are very important because otherwise, she will have to continue paying a huge amount of interest for her entire life but still not be able to clear off the debt.
The common mistake
The most common reason for people taking on huge credit card debt is also the common mistake they make. Fathers, mothers and young kids often believe that making the minimum payment every month against their credit card debt is better and will help them not to amass huge amount in debt.
However, the most significant thing that all of them tend to forget is the compound interest and the time factor. This results in unexpected and difficult consequences that eventually keep them awake at night.
Paying the minimum amount on credit card balance only exacerbates the debt ultimately. This means that it will eventually take several years to clear the debt which is the common situation that your mother is now experiencing.
The options available
With regards to this situation the good news is that there are several options that you or your mother can take on. Debt settlement is one but if you click here to know more about debt settlement companies and their reviews then you will see that debt settlement seldom works for credit card debts.
It is due to the high rate of interest compounded on the dues that the credit card issuing companies are often reluctant to give up. However, a consultation with an expert debt adviser is suggested so that you know the pros and cons of debt settlement before dumping the idea altogether.
The other options that you may consider are an interest-free credit card or a low-interest personal loan to pay off your mother’s credit card debt, These two are very good choices but it is, however, vital for you to know your financial status for it. You must be able to afford such addition of debts especially if you have your own debts to take care off.
Consult a debt advisor
To know about your options as well as the pros and cons of taking on your mother’s debt in your name it is best to consult a debt advisor. They are experienced professional to judge your financial condition and in finding out whether such a move will hamper your credit in the future knowing the fact that now it is you who will be responsible for the payments of the debt and not your mother.
- For making sure the payments are made each month they will review your budget and may even suggest a new debt management plan for you. A failure to pay will have a severe impact on your credit rating the professional will make sure that you clear the debt before the interest-free period expires as well.
- The debt advisor may also ask your mother to follow a revised budget and put all her income and expenditure under scrutiny. A proper income or expenditure breakdown will enable your mother as well as you to know her priority expenditures such as any utilities, rent, mortgage, food, and travel.
- Prioritizing the card payments is primarily important and therefore it is required to know what she needs to spend on and not what she is actually spending. This will help you to cut back a considerable amount to continue with the credit card payments.
- A proper analysis by the debt adviser will show her ‘disposable income’ and find out whether or not it is sufficient enough to cover the repayments on her credit card dues.
- Sometimes, contacting with the credit card company to explain the financial difficulty of your mother may also be suggested by the adviser with proper enclosures of the income and expenditure analysis. You may even ask them to freeze any further charges and interests on your mother’s credit card account when you meet them.
However, even after all these efforts if you find that the financial situation of your mother is still deteriorating, you may have to take a look at other options for a fast and effective debt solution.
Other things to consider
There are a few other things to consider when you look at the other plans that may seem appropriate to pull your mother out of debt. If your mother is working then you may opt for different debt relief options that help working women to get rid of unmanageable unsecured debts.
You must also bear in mind that no matter what debt solution you choose, it will always have an impact on the credit rating of your mother. Therefore, consider whether she wants to take on any loan in the future and then make the right choice according to the debt adviser.