Over £40k credit card debt

[Debtfree212]

Name changed.

Struggling to get my head around this and need some responses. My best friend has disclosed that she and her husband have £40k of credit card debt. This is on top of a mortgage, their student loans, each has an over drafts and they have monthly car finance. Speaking to her in detail (as we went through it together, more because I was in disbelief at the numbers) and it’s roughly:

lloyds card 1 - £5.5k
barclays card - £8.5k
amex - £18k
Lloyds card 2 - £4k
Mastercard - £2k

They are both high earners (I don’t know what that means in terms of exact salary) so they have at the start of this year decided they need to sort it and are putting down more than £1.5k a month onto these cards, they’ve been doing this since January.

I have no awareness of credit card debt as I have not had one (never liked the feeling of it) but is this level of credit card debt normal? It feels massive to me. How on earth have they been able to get 5 credit cards between them? Honestly shocked they are not stupid people / not extravagant I just couldn’t believe the figures - need to know if this feels excessive to other people?

she seemed very blasé about it but said they had quite a serious moment January where they knew they needed to knuckle down and sort it out, so they have blocked the cards / aren’t spending on them.

do I need to check in to see / suggest she get some extra help? So surprised I would never have thought they had this hanging over them to know them, but maybe other people have multiple credit cards and pay them off monthly?

she said it’s been about 5 years of holidays / Mat leave spending / furnishing house

Why are you listing each card with its balance? Why do you think we need to know that about your friend - in fact why do you know the exact balance on each individual card with each provider? That’s weird. Is this genuinely a friend or is it you/one of your DC?

You wouldn’t gasp in shock if they had a 40k bigger mortgage than they currently do would you? Maybe the cards were taken out to fund something like home improvements or other large expenditure. It sounds like they can pay them off.

@Debtfree212 I would hope that they are not planning a holiday this year so they can concentrate on getting rid of this debt. I would be terrified if this was me. what if they were suddenly made redundant? If they have to put holidays on a credit card then they cannot afford a holiday. once they get them all down they should be clearing one card of all debt every month to avoid interest.

I don't understand why people use credit cards for that amount of debt. They'd be better to consolidate into one loan than pay multiple high interest rates. Credit cards are short term debt management, not long term.

It's easy to get the CCs, I got 3 in the past 3 years with 8-10k balance on them each. Being a home owner helped a lot. I have been a relatively high earner for a few years but wasn't getting such high balance offers before we bought the house.

It's likely they've used credit transfer on 0% interest cards to move the debt around, and paid only a minimum amount on each. If they're getting towards the end of the 0% term, then they need to need to reduce the debt as much as possible or they'll be paying a lot of interests very quickly. They'll also be in trouble if they need to remortgage soon.

"High" earners doesn't really mean anything as it's so subjective, but since their balances seems similar to mine I don't think they earn that much. Hopefully their fixed expenses are low, but 1.5k monthly would take them 2 years to repay, that's a long time to cut back on things when you've been overspending for years.
The fact they have increased their debt significantly in a few years isn't a good sign, they live way above their means. I disagree with those saying they can afford it - they can't or they would not be putting holidays on CC.

The key for them is continue the high repayments until they've repaid all their cards. I think it's unlikely to happen, they'll likely repay some of it then give up and transfer the balances again.

That's maybe where you can encourage your friend if she has opened to you about it.

MYOB Nothing at all to do with you.

If the friend has been transparent about the spending then using credit cards rather than arranging a loan suggests they tend to spend first without a plan.

It is easy on a high income to feel 'I deserve it' and end up with a spending habit chasing a lifestyle.

why on earth are you posting on a public forum about your friend’s debt? Absolutely nothing to do with you. I’m very glad I don’t have friends like you.

Strange post.

Do you want us to put your friend in the stocks and shame her?

If I were your friend I'd be rethinking the friendship. You're not to be trusted and its a shame you've abused that trust by posting her personal financial details on a public forum. She'd easily figure out it was her if she read it.

There's nothing for you to get your head around (said in a wide eyed disingenuous way in your post).

It's lovely that you want to see if you should offer them options, but I don't think she's be too pleased about you posting on MN about her debt.

I would advise they go on Money Saving Expert as there is great support for how to clear debts. There is some shockingly bad advice being given on here.

If they're high earners with secure jobs, it's really not a total disaster or that unusual and if they've got them on 0% deals, it's not a bad way of financing maternity leave and house renovations - cheaper than a loan.

The fact that they can pay off £1500 pm means they'll be out of debt in not much more than 2 years. The main thing is that they're on 0% deals unless this is not possible due to bad credit history, but that sounds unlikely.

Indeed. MN is so weird about credit cards, with a strange obsession with financial advisers.

They don't need a financial adviser, a loan, or a remortgage. They just need to get the cards on 0% deals and pay them off. Alternatively they could not pay them off and save the money instead - they could make around £1500 a year profit from that amount of credit. That's what I'd do.

Why on earth does it bother you? I can’t imagine giving two hoots about friends’ financial arrangements which don’t affect me.

It’s not common to have this amount on credit cards, but the interest may be far less than on a loan or mortgage for the same amount. It would be more common to have this loaned and even more common to have it on a mortgage.

It’s really none of your concern though.

This. Did she send you all these figures? 🤔How have you made such a comprehensive and detailed log of all these debts?
I'd be abit pissed off to be honest.

In the early 2000s I had about £22k debt due to two short maternity leaves close together and DP not earning, replacing a boiler and then paying for a part-time nursery even though DP wasn't working.
It sounds like the OP has what in Money Saving Expert terms their light bulb moment. Point them in that direction and they can get support and understand snowballing (how to prioritise debt).
In my case, a little bit of naivety regarding costs of having children (pre-Mumsnet). No holidays (more like Park Resorts with Tesco vouchers) or cars!

Even if they can afford to start paying it back Personally I wouldn’t be able to tolerate the waste of money on interest.

I am amazed by people who spot a bargain and are tempted by it as a major purchase, pleased with their ‘saving’ , only to stick it in the card and incur so much in interest that they end up paying far more than the original non-bargain cost of the item.

At least when you take out finance for something they have to tell you the total cost of paying like that.

However, OP, jotting down the amount and name of each individual card and starting a detailed post like that, given that they have seemingly not asked you to research help for them, is a really intrusive level of interest in their business.

It’s ok to say ‘can you get any 0% deals or a loan with lower interest’ as a helpful suggestion if your friend is talking to you about it.

Coming at it from another perspective, your friends should make sure they are well insured. If one of them develops a life limiting illness then they are screwed. Most people have life insurance but there are plenty of illnesses that seriously affect your ability to work, so they should have an income protection plan too.

Wow, butt out & stop discussing your friend's finances on sm. You have really done a job with all the detail. I would be furious in her shoes.

If everyone followed the maximum of MYOB MN would be very dull!

Other people's finances are fascinating.

Sorry for everyone saying I included a lot of detail, I have changed the cards and amounts but wanted to include the type of spread across each card to see if that changed any of the advice. For example the Amex one being higher than the others. Only one of the cards is 0% interest. It’s been really helpful hearing that they should try and move everything to 0% or consolidate into a loan, as my friend was worried about the interest so it seems this isn’t something she or he had thought of or had been advised to do (and I wouldn’t know).

sorry if people think this is outing but that’s why I changed my name, didn’t give any of her details, and changed the figures / cards.

I just wanted to get a sense of if this level of cost is alarming as she seemed worried and “I’m sure everyone has this type of debt, you wouldn’t know because you are debt free, but husband knows so and so down the road who have even more than us” so I honestly wanted to understand if 40k for a couple is the norm - primarily to gauge whether she is right to be more concerned than her husband seems to be as he seems to have convinced her it’s a normal amount and they’ll be fine etc.

they could well be fine meeting the 1.5k every month for the next 2-3 years but I will definitely see if she can move it all onto a 0%

thanks for some really helpful advice

PS confused what mumsnet would be for without posting this type of thing sparing personal outing details?!?

This ^^

It isn’t difficult to get multiple credit cards if you have a decent credit score. My husband and I have about 30k credit card debt, 1/4 of our combined salaries. The difference here is it’s all interest free, and the 30k is sitting in a savings account paying us £100/month in interest and will be paid off in full the day before the 0% deals expire.
If they are high earners they’ve loads of options for paying less interest - MSE has some great advice. So long as one of them has a decent credit score they should be able to transfer some of the balances to 0% interest or a low interest loan might be better.

It sounds like they might be at an expensive stage of life. If they have a plan to pay for it, that's good. It is high, but I have similar (spread across loans and credit cards). Similarly we've just done a renovation and have well over £4K a month nursery fees, and that's what the debt has gone on. However the personal loan rate is about the same as our mortgage, the credit card is not high interest, and it would have been more expensive to add it to our mortgage (and then it's spread over a lot more years rather than just being paid back in a year).

They probably plan to pay it off with the £1.5k a month, and then their childcare costs might go down soon and they'll have more money to throw at it. I understand why she's worried, so am I, but it sounds like they will be able to rankle it now their home improvements are done

I don't think whether it's normal is the question. Whether it is or not isn't going to help her.

The key question is are they paying interest on any of them? If not when does the internet free period end? Have they exhausted options for transfers?

How serious this is depends on a lot of the above. Just making minimum payments on cards attracting interest will have them stuck much longer than if they are knocking 1.5k a month off the total debt.

The MSE forums and Dave Ramsay are where you should direct her. They need to pay smart as well as just pay.