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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Borrowing child’s savings...

470 replies

Quckname · 12/09/2021 12:02

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

OP posts:
MurielSpriggs · 14/09/2021 17:47

@ThreeLocusts

I think it's absolutely justified to borrow the child's money in order to avoid paying extortionate interest on credit card debt. After all, paying that extra money means less funds to spend on the child in the future.

That said, I also imagine that if I were the parent having to do this I'd feel a bit shit about it. But needs must.

The reason that some borrowers can only borrow at exorbitant interest rates is because lenders judge them to be financially irresponsible, and strongly suspect that they're going to have trouble getting repayments from them.

If they're not going to be good at paying back a commercial lender, which will have no hesitation unleashing lawyers and debt collectors, I don't rate the chances of their children ever being repaid.

PandemicAtTheDisco · 14/09/2021 17:56

I saved up most of my pocket money and then my parents borrowed it. They viewed it as their money once they saw how much I'd saved over a number of years.

It wasn't repaid. I never got what I was saving up for.

They had other options but chose to steal off me.

CockSpadget · 14/09/2021 18:09

[quote MRex]**@Fluffypastalslippers* - OP suggested that the only possible interest rate was 80% and for some reason @CockSpadget* believes this.[/quote]
Where did OP suggest the interest rate was 80%

CockSpadget · 14/09/2021 18:10

@PandemicAtTheDisco

I saved up most of my pocket money and then my parents borrowed it. They viewed it as their money once they saw how much I'd saved over a number of years.

It wasn't repaid. I never got what I was saving up for.

They had other options but chose to steal off me.

That was stealing as it was money you saved in person. This situation is completely different.
CockSpadget · 14/09/2021 18:16

@Fluffypastelslippers the OP said that it would take her 4 years to repay the savings, and 20 years to repay the debt if paid via credit route. So that's an extra 16 years, if the interest was only £20 per month, it would easily add up to thousands over those 16 years. Do the maths.

islandbeach · 14/09/2021 18:28

*The reason that some borrowers can only borrow at exorbitant interest rates is because lenders judge them to be financially irresponsible, and strongly suspect that they're going to have trouble getting repayments from them.

If they're not going to be good at paying back a commercial lender, which will have no hesitation unleashing lawyers and debt collectors, I don't rate the chances of their children ever being repaid.* The reason that some borrowers can only borrow at exorbitant interest rates is because lenders judge them to be financially irresponsible, and strongly suspect that they're going to have trouble getting repayments from them.

If they're not going to be good at paying back a commercial lender, which will have no hesitation unleashing lawyers and debt collectors, I don't rate the chances of their children ever being repaid.*

Even if this is true for OP and she never repaid a penny, right now it’s still the best financial decision to use cash in the bank to clear the debt to avoid paying interest. With the best intentions OP put money aside for her child she couldn’t actually afford. The child shouldn’t have had this amount of money in the first place. It’s a shame but many parents do not have spare money to save for a child’s future.

MRex · 14/09/2021 18:30

Ok, I'm exaggerating a little for effect but OP said she's paying £80 interest and £20 capital; so about 10% compounded over the 17 or so years (very odd period to come up with for a loan period!). The real average £10k loan rate in the UK now is 3.5% APR. Quite a difference!

CockSpadget · 14/09/2021 18:35

@MRex

Ok, I'm exaggerating a little for effect but OP said she's paying £80 interest and £20 capital; so about 10% compounded over the 17 or so years (very odd period to come up with for a loan period!). The real average £10k loan rate in the UK now is 3.5% APR. Quite a difference!
Oh, so you're lying (exaggerating) to try and make my opinion look stupid. The OP never said that it was 80% interest, and as interest rates like those are no longer allowed, I most certainly wouldn't have believed it if they had. Nice try.
CockSpadget · 14/09/2021 18:40

@MRex

Ok, I'm exaggerating a little for effect but OP said she's paying £80 interest and £20 capital; so about 10% compounded over the 17 or so years (very odd period to come up with for a loan period!). The real average £10k loan rate in the UK now is 3.5% APR. Quite a difference!
And as for your 3.5% interest rate, OP clearly stated they cannot get those kind of rates. So it's pointless you using them in any scenario.
ancientgran · 14/09/2021 18:44

@MRex

Ok, I'm exaggerating a little for effect but OP said she's paying £80 interest and £20 capital; so about 10% compounded over the 17 or so years (very odd period to come up with for a loan period!). The real average £10k loan rate in the UK now is 3.5% APR. Quite a difference!
They advertise those sort of rates, not everyone gets them.
Angel2702 · 14/09/2021 18:47

We used some of the kids savings to invest in a bond. We pay back the money monthly so when the bond is due to pay out they will have already been paid back and have the money from the bond pay out.

Oblomov21 · 14/09/2021 18:47

Stealing? Good grief. We put money into both ds's savings every month since birth. Once we borrowed £1000, which we paid back in 4 x £250 payments straight away. He'll never know.

Stealing? Hmm

Oblomov21 · 14/09/2021 18:49

"What do you call it when you take money that isn't yours from someone without their consent? Stealing. Doesn't matter who gave the child the money or how old the child is, that money has been given to the child. Check your morals. My god."

When does it transfer to being theirs? When is it yours and when does it become theirs?

lovelybitofsquirrell · 14/09/2021 18:50

Honestly. I would and have. It was that or we had no food on the table that month.

I repaid it all, with interest 😉

flippertyop · 14/09/2021 18:52

I think it's fine if you pay it back. My view would be that even with the best of intentions you will not

Mymapuddlington · 14/09/2021 18:53

@CockSpadget my interest on a debt that I’m assuming is a lot less than op (as won’t take that long to clear) is £124 Blush

MRex · 14/09/2021 18:57

@ancientgran - 10%+ is a subprime rate. As I have explained multiple times, OP is not being honest about their financial status if this is all they can get. Someone with old debt they have successfully serviced would currently get a much better rate (even nonprime). If OP isn't being honest, why trust they will repay, whatever today's intention might be? Can you trust that all the money was really all put in by them when other facts have been altered to make the story work better in OP's favour? If it was genuinely their money then using it may be the best option, but there are some large holes in the story.

riromay · 14/09/2021 18:58

God dammit, people can be really stupid. Lmao at the people crying about MORALS!! Get a grip.

OP use the money, it's yours !!

Quitelikeacatslife · 14/09/2021 19:09

This is the most dramatic thread! Stealing! For goodness sake.
If someone else had gifted the money to the child then fair enough, not hers to touch.
But otherwise is just somewhere she is storing her money. It was a nice idea to save for your child but if you can't afford to then you can't. Circumstances change and kids don't have a right to a lump sum when the parent can't afford it.
Use the money, don't pay it back as such but when you can afford to start saving again put some money back in.
Anything else is madness!

CockSpadget · 14/09/2021 19:12

[quote MRex]@ancientgran - 10%+ is a subprime rate. As I have explained multiple times, OP is not being honest about their financial status if this is all they can get. Someone with old debt they have successfully serviced would currently get a much better rate (even nonprime). If OP isn't being honest, why trust they will repay, whatever today's intention might be? Can you trust that all the money was really all put in by them when other facts have been altered to make the story work better in OP's favour? If it was genuinely their money then using it may be the best option, but there are some large holes in the story.[/quote]
Bit rich accusing OP of lying when you've just done the same. 10%+ rate on credit cards is not necessarily subprime. The OP may not be able to get a standard loan for the full amount as they have a low income to lending ratio. There can be other reasons than automatically calling someone a liar.
And now you're accusing them of not putting the money into the savings themselves. Really got it in for this OP haven't you.

islandbeach · 14/09/2021 19:33

[quote MRex]@ancientgran - 10%+ is a subprime rate. As I have explained multiple times, OP is not being honest about their financial status if this is all they can get. Someone with old debt they have successfully serviced would currently get a much better rate (even nonprime). If OP isn't being honest, why trust they will repay, whatever today's intention might be? Can you trust that all the money was really all put in by them when other facts have been altered to make the story work better in OP's favour? If it was genuinely their money then using it may be the best option, but there are some large holes in the story.[/quote]
Good grief! Even if she has lied and has the worst credit rating in the world and never repays a single penny in the savings - it would still be the best financial decision to use the money she put aside (but couldn’t afford) for her child.

Most posters have said if it was money gifted by others then that would be different. But that is not what the OP has said so as with any thread people base their answers on the info they have been given.

ancientgran · 14/09/2021 21:31

[quote MRex]@ancientgran - 10%+ is a subprime rate. As I have explained multiple times, OP is not being honest about their financial status if this is all they can get. Someone with old debt they have successfully serviced would currently get a much better rate (even nonprime). If OP isn't being honest, why trust they will repay, whatever today's intention might be? Can you trust that all the money was really all put in by them when other facts have been altered to make the story work better in OP's favour? If it was genuinely their money then using it may be the best option, but there are some large holes in the story.[/quote]
Do I need to trust that all the money was put in by them? The child will live in a house with more disposable money and a non worried mother so best for the child.

MurielSpriggs · 14/09/2021 21:36

@Oblomov21

"What do you call it when you take money that isn't yours from someone without their consent? Stealing. Doesn't matter who gave the child the money or how old the child is, that money has been given to the child. Check your morals. My god."

When does it transfer to being theirs? When is it yours and when does it become theirs?

When you give it to them. In this case that would be when the cash is transferred into their account. This really isn't a grey area.
jerometheturnipking · 14/09/2021 21:46

So when HMRC ask for your household savings and include any child savings in that pot to calculate your UC entitlement - is it still stealing then?

MayorGoodwaysChicken · 14/09/2021 21:47

@PandemicAtTheDisco

I saved up most of my pocket money and then my parents borrowed it. They viewed it as their money once they saw how much I'd saved over a number of years.

It wasn't repaid. I never got what I was saving up for.

They had other options but chose to steal off me.

That’s terrible….but totally irrelevant as it’s not in any way comparable to what the OP is talking about. I find posts like this bizarre!
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