Borrowing child’s savings...

[Quckname]

Do you think the following is acceptable?

Parent has some expensive debt on credit cards. The interest free period is expiring and the parent is not able to get a loan or balance transfer to a lower rate.

Child has an instant access savings account with some money in.

Is it ok for the parent to borrow funds from the child to repay the expensive debt, as long as they ensure that the savings are repaid (with interest) before the child would have used the account?

So as not to drip feed:

• money in the savings account was paid in by the same parent (not friends & family)
• money would be repaid along with the compound interest that it would have accrued in savings
• repaying to the child’s savings would take approx 3 - 4 years, compared to it taking 20 years plus to repay on the credit cards with high interest
• child is still young so not due to receive the savings for a long time
• the child has not been asked for their opinion because they are too young (and too generous) to make an informed decision
• parent has explored and exhausted all other options to reduce the cost of borrowing
• if paid off, the credit accounts will be shut down so that it is not possible to accrue large debt again

What do you think?

YABU - borrowing the money is the same as stealing, the parent shouldn’t touch the child’s savings and should repay their debt over the longer period of time at the high interest rate.

YANBU - the money will be repaid to the child’s savings, and the child will benefit from having a parent that is not stuck in long term expensive debt

@Quckname we borrowed our then pre school's son's savings to help us with a deposit to our house. We have more than paid him back over the years in terms of money spent on him. However we still remember this debt and will put it in a savings account for him now he is 18 and off to Uni.

And although we were having an issue with cash flow at that particular time we are well off in general.

So do not feel guilty. You are not borrowing money to buy yourself an outfit or anything and I am sure it will benefit your DC anyway even if it's indirectly

I borrowed my kid's savings to buy a car. I've now paid it back, long before they were 18. No biggie.

You put the money in and it makes financial sense to go ahead and do it. This story is going to make some of you throw up your hands in horror. When I was a teenager (many, many years ago!), I had a part time job at a small market garden. Every Friday the boss called round to our house to drop off my mum's weekly order of vegetables and my wages in cash. My mum would promptly pay for the veg using the cash. We kept a running total of how much she owed me on the back of the calendar in the kitchen and every now and then she settled up. "Stick it on the back of the calendar" became a common family saying right up until she died aged 80. I don't recall ever feeling hard done by!

YANBU and would be utterly stupid to take any notice of those who disagree because they're putting their misplaced 'morals' against sensible financial decisions that would save hundreds if not thousands in unnecessary interest by using this money to pay off the credit card debt.

Pay off the debt, and set up a standing order to repay the money at an affordable rate while still meeting your bills and allowing you and your DC to have something of a life now.

And as for those who say that people never change and the OP won't pay the money back, what tosh. Plenty of people do change over time and learn from their mistakes.

OP, if you haven't done so already, have a look at the budgeting advice on Moneysaving expert and get the weekly email. You'll find tips to cut your essential bills and make bits of extra money here and there. You'll also find advice on getting the best savings accounts for your DC so they can get a bit of interest on their savings when
(not if ) you pay them back.

my dc have savings, that i put into
however i was able to lower the amount i put in as necessary.

i would worry about borrowing from their pot in case i died or something

you need to do a proper budget and put a sensible doable amount into your dc savings.

why do you have debts?
will it likely happen again?

If you were repaying the debt well, then you would be able to get another loan from a different place. Some of the detachment in your previous post writing style also suggests you haven't taken full responsibility for your debt. So, I'm fairly certain you won't pay it back. Now, you made the savings, and you know what the financial difficulties will be if you don't use your child's money now. It's your choice to do it, and it may well be for the best to use that money. You should avoid telling your child though, because it could breed unnecessary resentment later when it becomes clear that you didn't ever repay her.

@MRex

If you were repaying the debt well, then you would be able to get another loan from a different place. Some of the detachment in your previous post writing style also suggests you haven't taken full responsibility for your debt. So, I'm fairly certain you won't pay it back. Now, you made the savings, and you know what the financial difficulties will be if you don't use your child's money now. It's your choice to do it, and it may well be for the best to use that money. You should avoid telling your child though, because it could breed unnecessary resentment later when it becomes clear that you didn't ever repay her.

If for chuffs sake, read the OPs posts properly! They haven't said they can't get further loans, they have said they can't get a lower rate, they have sensible had the debts on 0%deals that have now ended. So the option is pay thousands extra in interest or pay minimal interest and use the money THEY HAVE SAVED. Any debt advisor worth their salt would tell them to use the savings rather than take out further loans and pay unnecessary interest.

@CockSpadget - there are plenty of 0% interest cards still, so there is a reason why OP is unable to get that. There are also a wide range of other loan options that certainly carry far lower interest than the spurious suggestion of 80% going on interest that OP came up with as justification (the worst store cards capped out at 40%, 22% is the usual highest rate these days and much lower rates are available). Those who have a problem with managing money often lie most of all to themselves, certainly OP's little tale does not add up to truth.

It's stealing. You can't take something that belongs to someone else without their permission. Otherwise I could "borrow" the neighbour's car without asking them so long as I brought it back when I'd finished with it and made sure it was in the same condition as when I'd stolen it.

What happens if you die before you have paid it back? What happens if you become long-term unemployed and/or disabled? You're in a financial mess because your assumptions about how you would be able to manage your debt were inaccurate - how can you be sure that your belief you'll be able to pay it all back within four years is accurate to? You could have an accident, there could be a serious financial crash that makes the last 15 years look like a walk in the park.

@MRex Those who have a problem with managing money often lie most of all to themselves, certainly OP's little tale does not add up to truth.

Yes! That describes the me between the ages of 18 and 34 perfectly. I genuinely believed I could borrow my way out of trouble, at least until all the 0% balance transfer offers dried up. I genuinely believed I'd get a payrise every year and didn't consider that in real terms my pay would be frozen for more or less a decade. My debt problem was obvious to everyone except me.

@MRex and there may be several reasons other than bad repayment history that mean they can't get those deals now. They may have had those particular deals/providers already, their debt amount may be higher than the credit limit offered on those deals, the fact that they have a high amount of existing debt and are using 100% of their available credit will affect their lending score etc, to get those 0% deals you have to have a pretty near on perfect credit score, so not being eligible now doesn't automatically mean they are a bad payer.
The fact that the OP still contributed to the savings while servicing the debt in the first place is a good sign that they will have every intention of replacing it.

Please don't listen to people saying your stealing, it is your own money, you just earmarked it towards your child and have found out it is needed to make your child's life better NOW.
Pay off the debt and repay the money into the account if you want, but it is stupid to pay the debt off at such steep interest rates, when this option is viable.
Ignor the nasty comments, they usually come from people who have the money not to worry.

@HarrietsChariot

It's stealing. You can't take something that belongs to someone else without their permission. Otherwise I could "borrow" the neighbour's car without asking them so long as I brought it back when I'd finished with it and made sure it was in the same condition as when I'd stolen it.

What happens if you die before you have paid it back? What happens if you become long-term unemployed and/or disabled? You're in a financial mess because your assumptions about how you would be able to manage your debt were inaccurate - how can you be sure that your belief you'll be able to pay it all back within four years is accurate to? You could have an accident, there could be a serious financial crash that makes the last 15 years look like a walk in the park.

Or the OP could have struggled due all manner of reasons that won't apply going forwards, like separation, being on furlough so suffering reduced income, or the expensive preschool time where lots of childcare is required.

Or like she said, saving for her DC when she couldn't really afford to. Which led her to get into debt. People seem to be forgetting that if she hadn't saved for DC, because she couldn't really afford to, they wouldn't have savings anyway, and the OP wouldn't be in debt.

If something drastic like death or disablement happens, maybe she has insurance to cover this, and in any case, the loss of a couple of grand will be neither here nor there should that happen.

What happens if you die before you have paid it back? What happens if you become long-term unemployed and/or disabled?

Do you think the child will care about a bit of cash if their mother dies? IF they become unemployed or disabled, do you think the child would prefer a bit of money in a savings account or food on the table?

The people saying its wrong are coming from a place of privilege.

The people saying its wrong are coming from a place of privilege

^^ This. A lot of people on here have ideas about money that are so far off average and serve to demonstrate that they've never been in a position other than having plenty of money.

[quote CockSpadget]@MRex and there may be several reasons other than bad repayment history that mean they can't get those deals now. They may have had those particular deals/providers already, their debt amount may be higher than the credit limit offered on those deals, the fact that they have a high amount of existing debt and are using 100% of their available credit will affect their lending score etc, to get those 0% deals you have to have a pretty near on perfect credit score, so not being eligible now doesn't automatically mean they are a bad payer.
The fact that the OP still contributed to the savings while servicing the debt in the first place is a good sign that they will have every intention of replacing it. [/quote]

1. "Had all deals already" - not possible to be of an age with a primary child and have used all possible deals.
2. "Debt higher than credit limit" - not if the total is 2/3 of the child's savings, OP isn't giving exact amounts but talking about £4k we can expect that ballpark, and more than that can be obtained.
3. "Lending score" is based largely on successful repayment; if the OP is servicing the debt then banks would look very favourably on effectively extending a term.
4. "near on perfect credit score" - again this is based on successful repayment.
5. "not being eligible now doesn't automatically mean they are a bad payer" - not eligible for anything except 80% interest!? Well, that absolutely does mean there is a payment history issue.

The OP is lying. It may still be the right thing for the family for her to use that money, but backing her top in those lies so that she thinks this version of truth is normal, will not help.

So wonderful, having never met the OP people know all there is to know about her life.
Anyone spouting detailed information is a fraud, and has money. Ignor.
Use your savings.

Of course it's okay op. We did this regularly when our kids were little. Like you, we'd put the money into their savings accounts in the first place and they were years off needing it. Nobody suffered if we took out a lump sum and then paid it back monthly.
Why anyone would think otherwise is beyond me.

[quote MRex]@CockSpadget - there are plenty of 0% interest cards still, so there is a reason why OP is unable to get that. There are also a wide range of other loan options that certainly carry far lower interest than the spurious suggestion of 80% going on interest that OP came up with as justification (the worst store cards capped out at 40%, 22% is the usual highest rate these days and much lower rates are available). Those who have a problem with managing money often lie most of all to themselves, certainly OP's little tale does not add up to truth.[/quote]
Interest rates are normally looked at per annum, maybe the 80% is what she'd pay over the years it would take her to repay the loan.

There is one very obvious reason why she might not be able to get a 0% card and that is the level of debt she has. I've got no debt and money in savings and I am bombarded with these deals. The sad truth is that the people who need them most won't get them.

We've had to take money from our children's savings to help pay a tax bill but it was instantly repaid when the next wages came in.
As long as it's repaid in full, I don't see a problem.
Life happens.

jeez
i am not coming from a place of privilege
i am coming from a place of bad financial decisions myself.
and i reduced how much i put aside for my dd.
i am with stepchange now.
but it is the op's decision

1) "Had all deals already" - not possible to be of an age with a primary child and have used all possible deals. My DH was in his 50s when our youngest was still in primary school, I was 49. DD had a friend whose dad was over 70 while she was in primary school.

People have children at various times in their lives.

I’ve done this on a much much smaller scale. As in dipped into his piggy bank to buy milk and replaced on pay day.

Have you thought about a debt relief order or IVA? How can you guarantee you will pay it back? How can you guarantee you won’t get more credit?

I don’t mean that in a horrible way, I’ve paid my credit cards (yes plural) off multiple times and always get tempted

OP ignore these perfect pissing peter's, who are saying you're stealing, calling you a liar etc. To pay thousands of pounds unnecessarily would be madness. You tried to do a good thing by saving for you're child, that's something a lot of parents either can't do, or choose not to do. It benefits your child far more now to pay off the debts, than to not do it, and that is the main thing, what is in the best interest of your child.