Helping family pay off bills with 0% APY

JoshNurse · ‎09-29-2014

Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?

Ghoshida · ‎09-29-2014

@JoshNurse wrote:
Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?

In the short run, it will hurt your credit.

It's bound to get up when you pay all of it. But in the meanwhile, your credit report will look pretty down.

Even if you need to transfer the entire balance, I'd strongly suggest paying down 40% of it in the next 1-2 months; the remaining you can carry for a while.

Also, if you apply for new credit, I'm guessing this high util will drag you down: instant denials, or less attractive terms.

JoshNurse · ‎09-29-2014

@Ghoshida wrote:
@JoshNurse wrote:
Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?
In the short run, it will hurt your credit.

It's bound to get up when you pay all of it. But in the meanwhile, your credit report will look pretty down.

Even if you need to transfer the entire balance, I'd strongly suggest paying down 40% of it in the next 1-2 months; the remaining you can carry for a while.

Also, if you apply for new credit, I'm guessing this high util will drag you down: instant denials, or less attractive terms.

I dont plan to apply for any new credit for the next 2 years.

thelethargicage · ‎09-29-2014

@JoshNurse wrote:
Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?

From experience I can tell you, don't loan money to family--you'll never get it back. And ruin your relationship in the process.

Anonymous · ‎09-29-2014

@thelethargicage wrote:
@JoshNurse wrote:
Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?
From experience I can tell you, don't loan money to family--you'll never get it back. And ruin your relationship in the process.

depends on family I think, some families will loan/give each other money without expecting to get paid back, some family will fight over 100 bucks.

B335is · ‎09-29-2014

@JoshNurse wrote:
Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?

Yeah 95% reporting util is going to hit your score hard for awhile. Once it's paid off your AAoA will have matured so it will rebound. Generally, I think it's human nature to want to help someone out - especially family, but at the end of the day it's your financial reputation you're putting on the line, not theirs. Good luck with whatever you decide to do.

JoshNurse · ‎09-29-2014

@B335is wrote:
@JoshNurse wrote:
Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?
Yeah 95% reporting util is going to hit your score hard for awhile. Once it's paid off your AAoA will have matured so it will rebound. Generally, I think it's human nature to want to help someone out - especially family, but at the end of the day it's your financial reputation you're putting on the line, not theirs. Good luck with whatever you decide to do.

Thanks I think I can trust them. It will be my parents and my mom always pays me back. If they dont I guess my credit will be destroyed

Jlu · ‎09-29-2014

Don't forget, you'll also be paying about $300 in BT fees if you go through with this. Discover might get a little nervous too, but if you can get it paid in a year then they'll love you forever.

efranklin23 · ‎09-29-2014

@thelethargicage wrote:
@JoshNurse wrote:
Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?
From experience I can tell you, don't loan money to family--you'll never get it back. And ruin your relationship in the process.

+1 Never use your credit to help others. If anything, try to help them attain credit (not in your name) and make a small personal loan to them (with your own money) but you don't want to mess with your credit as it can destroy/limit your opportunities

AMEX BCE (30K), DISCOVER IT (29.5K), NFCU CASH REWARDS (25K), BOA TRAVEL REWARDS (15K), USAA VISA (13K), CHASE SAPPHIRE RESERVE (13K), COMMENCE MASTERCARD (7.5K), CHASE FREEDOM (7K), CHASE FREEDOM (7K), TFCU CC (2.5K), TARGET REDCARD (900)

Anonymous · ‎09-29-2014

@JoshNurse wrote:
Will this affect my credit and will it recover after everything is paid in 1 year?

I want to help my familly that has $9500 in debt by doing a balance transfer to my Discover IT card. My credit limit is $10,000 so I will be at 99% usage.

It will be 0% APY for 1 year and they want to pay it off in exactly on year or one month less. Will this hurt my credit and can it improve once its all paid for?

Not all families are created equal, and if you have a good one, I don't see why you couldn't help. If it works as you propose, it would definitely help you, although a year from now. However, you better make THAT DISCOVER card the only one with a balance reporting. Utility on everything else must be zero (PIF before statement).

Since they want to pay it in exactly 12 installments, they will pay way, way above minimum each month, which is a big plus. And a year from now, you will have A RECORD of paying a 10k "loan" with no problem, while managing your other cards with zero utility, that would be pretty impressive. I think your trust could be compensated exponentially.