If you’re drowning in credit card debt, you may be considering drastic measures to pay it off. One option that has probably crossed your mind is asking for help from friends or family to bring your balance down.
This solution has its benefits, but also has the potential to end badly. Before asking for assistance from loved ones to deal with your debt, take a look at the information below – you’ll want to hear what the Nerds think about this tricky topic.
Borrowing from loved ones is tempting, but could come at a cost
There are obvious benefits to borrowing money from friends and family to pay off your debt:
- You won’t have to worry about a grueling consolidation loan application process.
- You’ll probably get a good interest rate, no matter what shape your credit is in.
- You won’t have to worry about your lender reporting a late payment to the credit bureaus.
Getting a loan from a loved one might seem like the ideal plan, but there are some serious drawbacks to consider. For one thing, if you run into trouble and are unable to pay your friend or family member back, you could do irreparable damage to your relationship. This is no small matter.
And even if you are making regular payments to your loved one, there’s still a chance that introducing finances to your relationship will strain it. For instance, let’s say you borrow money from a generous friend to pay off your credit card. Will you be comfortable making plans with that same friend to go shopping a few weeks later? Or will you feel strange about spending on non-essentials when she’s around?
In short, it’s important to evaluate your willingness to have a lender-borrower relationship with a loved one.
» MORE: How to pay off debt
Consider “creative” measures with caution
It’s understandable if the idea of borrowing money from friends or family doesn’t sit quite right with you. In this case, you might be considering a way to get the money gifted to you.
In recent years, creative measures such as crowd funding or throwing a party to solicit donations for debt payoff have become popular. To the uninitiated, these solutions seem to provide the best of both worlds: Your debt will be history and you won’t have to worry about a messy loan arrangement with someone close to you.
But in digging deeper, you’ll find that these tactics often come with the same interpersonal drawbacks as borrowing. For example, let’s say you decide to have a party where you ask your loved ones to make a donation to your “cause.” Some of your friends and family might be put off by the idea, and others who are uncomfortable with it might feel awkward declining your invitation.
Again, you’re potentially putting relationships on the line. Carefully consider whether or not this is worth it before proceeding.
The best way might be the old-fashioned way
The Nerds aren’t often described as old-fashioned, but when it comes to paying off credit card debt, we tend to think conventional methods are best. Here are some tips for bringing your balance down without involving your loved ones:
- Stop swiping – You’ll have a tough time paying off your debt if you’re still charging. For the moment, it’s a good idea to switch to cash or debit.
- Make a budget and track your spending – This will make it easier to set aside a big chunk of change every month for debt payoff.
- Consider a balance transfer – If you have good credit, it might be a good idea to move your high interest debt onto a 0% card. Just be sure to make your payments on time and resist the urge to charge up your old card again.
- Pay off your cards in order of interest rate – Pay off the card with the highest APR first, then the card with the next highest rate, and so on. This will minimize your interest payments over the course of the payoff process.
The takeaway: Asking friends and family for help in paying off your credit card debt is a risky idea. Unless you don’t have another option, your best bet is probably to roll up your sleeves and get started repaying it on your own!
Mom with daughter’s credit card image via Shutterstock