Facebook Rss Twitter Youtube MSN

Don’t pay grandson’s credit card bills

Jul 09, 2012 | | Comments Comments Off

Dear Liz: I hope you can offer me some advice regarding a large credit card debt. My 28-year-old grandson is currently enrolled in college part-time and is employed. Over the last few years, he was not in school and unable to find work. He has, consequently, accumulated a total debt of $7,000 on his three credit cards. What would you advise him to do? He is paying the interest only on his debts as that is all he can afford.

Answer: Today’s minimum payments require credit card borrowers to repay a portion of principal along with the interest owed that month. If he truly is paying only interest, then he’s paying less than the minimum required and his credit scores have probably taken a big hit.

Let’s assume that he’s actually paying the minimums on his cards. He needs to increase his payments if he wants to work his way out of debt faster. That will require earning more income (by working more hours or taking a second job), cutting expenses or both.

Seven thousand dollars is not an insurmountable amount of debt, and certainly not something he should file bankruptcy over. But he may want to talk to a legitimate credit counselor about budgeting strategies or, if he’s really in a bind, a debt management plan that would allow him to pay the debt off over time at lower interest rates. He can get referrals from the National Foundation for Credit Counseling at http://www.nfcc.org.

What you shouldn’t do is offer to pay this debt, even if you can. Struggling to repay this debt could teach him not to carry balances in the future. If you pay the debt, the only thing he learns is that he can count on Grandma to bail him out of his own messes.

Related Posts

  • Quit trying to change a spendthrift
    Dear Liz: I'm desperate and need your input. My brother is in his 50s and makes only $10 an hour. His paycheck is gone after two days from eating o...
  • Son-in-law badgers elderly couple for money
    Dear Liz: I am 84, and my husband is 88. We have two daughters, the elder of whom is married to a very controlling man. In the past, we lent them mon...
  • Bad credit traps job seeker
    Dear Liz: How do you recover from bankruptcy? My daughter lost a very good job and got upside down with her house, so she had to file for bankruptcy....
  • How to cope with a big medical bill
    Dear Liz: I'm 26 and got married in August. For our honeymoon, we went to my hometown. We went for a hike through the hills and I got bitten by a r...

Categories : Credit & Debt, Q&A