# 42 years to pay off 1 credit card !



## paulcoade (18 Dec 2012)

Hi , 

I , as a lot people did around 2006  , believed whole-heartedly in the Celtic Tiger , that the good times were rolling and life was sweet . 

Now a lot of us are learning that in the land of milk and honey the milk can go sour and the honey can stick to your shoes ! 

My debts now amount to a mortgage of €215k , €195 outstanding 
3 credit cards amounting to €20k , €9,500 , €6,400 and €4,100.
And a personal loan of €20k , €12500 outstanding.

I am 29 years old and have been working in the same profession since age 15 so am safe enough in employment as I work for one of the rare companies that is actually faring quite well in ireland .
Saying that , wages have decreased by around 10% and workload has also dropped off slightly since taking out the mortgage and other debts form 2006-2008 (all our work is piece rate so reduced workload has it's downside ) .

The mortgage is probably the life saver for me at the minute as its an offset mortgage taken out with First Active now run by Ulster Bank , so the interest rate is linked to ECB +1.15% .

The personal debt has really enslaved me over the past few years , working 6 days a week , worn out and missing out on time with my partner and my son trying to keep up minimum monthly payments on the credit cards. I was able to get some periods of reduced interest but they all came to an end too ( maybe because i was always paying on time) . It came to be too much for me and early 2012 I signed up with a debt management company . My payments were reaching €900 p.m. for personal loan and cards so with the DMC it's down to €500 . It's hard at the minute to know how well the DMC is working out as there are a few changes going on at the minute but its given me a bit of time to breathe financially . 

Now , after all that , to my question ... In relation to one of my credit cards which has a balance of €9500 , on the last few statements it has had a "minimum payment warning" which says that if I continue to only make the minimum payment , which is €250 p.m. , then the debt will not be paid off until 2054 ! Works out about €123,000 !

Have any of you come across this before ? What are your opinions on this ?

P.S. I know it was extremely idiotic of me to run up so much debt and i have learned a very harsh lesson from it . 

Thanks for reading this far,

Regards,

Paul.


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## RichInSpirit (18 Dec 2012)

Are you still paying interest on your credit card. ? 
Ask the credit card crowd to stop putting interest on your repayments as you are technically in default anyway.


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## vandriver (18 Dec 2012)

It's not as bad as you think!Your minimum payment decreases every month so you will not pay 120 grand.If you keep up the 250 a month ,you should have it cleared in 5 years.


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## tallpaul (18 Dec 2012)

Frankly the OP's post is a case study in why the country is in the mess it is in. Irresponsible lending on both sides, no seeing the future or the bigger picture, a rush out of school to start earning the big dosh to spend spend spend... I could go on.

A prime example of why there should be no debt forgiveness in this country.


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## manninp2 (18 Dec 2012)

tallpaul said:


> Frankly the OP's post is a case study in why the country is in the mess it is in. Irresponsible lending on both sides, no seeing the future or the bigger picture, a rush out of school to start earning the big dosh to spend spend spend... I could go on.
> 
> A prime example of why there should be no debt forgiveness in this country.



Thank you Paul, that was very helpful. Nobody here had any clue that was the case until you pointed it out.

May I assist you in clambering back onto your high horse?


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## AgathaC (18 Dec 2012)

Hope that things improve soon for you.


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## tallpaul (18 Dec 2012)

manninp2 said:


> Thank you Paul, that was very helpful. Nobody here had any clue that was the case until you pointed it out.
> 
> May I assist you in clambering back onto your high horse?


 
I'm not on my high horse as you put it. But in my opinion it needs to be said that those that lived the high life reap what they have sown. 

Those that lived and spent prudently and within their means during the 'boom' years should not have to pay the price of the recklessness and stupidity of others. The OP asked for opinions about interest rates on credit card debts of €40K, that is FORTY THOUSAND EURO!!!. I've given mine.


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## SarahMc (18 Dec 2012)

tallpaul said:


> I'm not on my high horse as you put it. But in my opinion it needs to be said that those that lived the high life reap what they have sown.
> 
> Those that lived and spent prudently and within their means during the 'boom' years should not have to pay the price of the recklessness and stupidity of others. The OP asked for opinions about interest rates on credit card debts of €40K, that is FORTY THOUSAND EURO!!!. I've given mine.



I can't see where the OP asked you, me or anyone else to pay for his 'recklessness and stupidity'


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## wbbs (18 Dec 2012)

I would suggest opening a credit union account, save for the required time and apply for a loan to clear as much of the cc debt as possible, you may get some of it initially and more later when you can show the cards are no longer being used.


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## demoivre (18 Dec 2012)

tallpaul said:


> I'm not on my high horse as you put it. But in my opinion it needs to be said that those that lived the high life reap what they have sown.
> 
> Those that lived and spent prudently and within their means during the 'boom' years should not have to pay the price of the recklessness and stupidity of others. The OP asked for opinions about interest rates on credit card debts of €40K, that is FORTY THOUSAND EURO!!!. I've given mine.



20k in cc debt if you read the op. Regardless, you are paying the price anyway with €3.5bn of adjustments in the recent budget. If consumers like the OP were spending in the real economy instead of servicing debt, resulting in higher tax receipts, the adjustments wouldn't need to be as severe.

OP if you want to make real headway with cc debt, and your credit record is not that important to you, stop paying completely until the debts are written off , interest and penalties are no longer added, and then negotiate. You may well be able to get a partial write down. I see no advantage to a debt agency unless they can get  a write down or the interest frozen.


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## Tired Paul (18 Dec 2012)

tallpaul said:


> I'm not on my high horse as you put it. But in my opinion it needs to be said that those that lived the high life reap what they have sown.
> 
> Those that lived and spent prudently and within their means during the 'boom' years should not have to pay the price of the recklessness and stupidity of others. The OP asked for opinions about interest rates on credit card debts of €40K, that is FORTY THOUSAND EURO!!!. I've given mine.


 
Couldn't agree more and more people should speak about it. Sorry OP as this does not answer any of you questions. 
I, like many others did not spend or borrow recklessly  - more the fool me now ???????


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## becky (18 Dec 2012)

Tired Paul said:


> Couldn't agree more and more people should speak about it. Sorry OP as this does not answer any of you questions.
> I, like many others did not spend or borrow recklessly  - more the fool me now ???????



I didn't spend or borrow recklessly but I don't feel like a fool.  I'm happy that I'm not in the OP's position.


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## daheff (18 Dec 2012)

Ok, maybe this is crazy but anyways...stop paying off one of the cards (whichever has the cheapest rate) and use the payments saved on this to pay off the card with the most expensive rate. 

If nothing else it'll make you feel less stressed to have paid off (or significantly reduced) one of the card debts.

If the card co you arent paying call...just tell them outright that you can no longer afford to pay them. Tell them you have other card debts and that if they can write off some of the debt you will start repaying them (chances are they wont, but its no harm chancing your arm).


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## paulcoade (18 Dec 2012)

Thanks for all the input , to answer some questions;

RichInSpirit , the interest was frozen for a while but there were changes with the debt management company so a few payments haven't gone on to the card yet ( I have sent the payments but new DMC are in process of setting up to make the payments).

Vandriver , 5 years is correct if all interest was frozen . 42 years sounds right if interest is left on to compound - I just think its astonishing that a ten grand debt can end up costing 123k ! (In process of freezing the interest so hopefully in 5years I can be free! )

tallpaul , you've got it spot on there , totally irresponsible and certainly no foresight on my part . I got it all wrong and will not be so reckless again. I have taken no extra debt since 2009 (when I realised how bad it was getting with compounding interest) and all credit cards cut up since then . Debit card all the way now .
As regard to no debt forgiveness , I think it could have been done on a case by case basis where an independant should make an assessment on whether excessive profits have been made by the lender and the debt to be reduced to adjust it to a more modest profit . This would work out a lot better if the taxpayer didn't own most of the banks . In my view they should have been allowed to fail rather than , as you mentioned yourself , people with no involvement in the risk or the profit sharing of the banks paying for their losses.

AgathaC , thanks for your post , I hope so too !

wbbs , thanks for your advice . I have a cu account with minimal shares , around €100 . I cleared my cu loan with €11k of shares in 2010 . Credit union loan is an option if I can't get total write off of interest on the cards if cu is willing to lend . Cards have been cut up since 2009.

Demoivre , again thanks , I would imagine my credit rating is already tarnished as the cards have only been getting agreed reduced payments through the debt management co. . It is not important to me as I don't think I will ever want another loan at this stage after all the hardship I have put myself through with credit. I would consider the approach you have mentioned . I have definitely paid back , in monthly repayments , what I have spent on the cards + 20% so I would have no problem defaulting and seeking a write down .

TiredPaul , you are the wise one ! The fool is the one working to pay back the banks.


Thanks again for all the replies.

Paul.


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## bacchus (19 Dec 2012)

demoivre said:


> OP if you want to make real headway with cc debt, and your credit record is not that important to you, stop paying completely until the debts are written off , interest and penalties are no longer added, and then negotiate. You may well be able to get a partial write down.



As must as i respects your posts, i can't agree with this one... It seems to easy to spend money and let the others pick up the tab. What if the rest of the country do the same?
I disagree with debt write off/down as much as i disagree with the ridiculously high rate applied to cc balances.


OP, have you looked into transfering your cc balance into some other banks? you may be able to get a 0% interest for few months, giving you some breathing space...
[broken link removed]


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## vandriver (19 Dec 2012)

*Quote* Vandriver , 5 years is correct if all interest was frozen . 42 years sounds right if interest is left on to compound - I just think its astonishing that a ten grand debt can end up costing 123k ! (In process of freezing the interest so hopefully in 5years I can be free! ).

I don't need to be corrected,when what I originally posted was correct.You have entirely missed my point that your minimum payment *decreases* every month.I never mentioned freezing interest because the interest doesn't need to be frozen for you to pay off the cc in 5 years.If you take out a calculator,and divide your 10 k by 250 you get 40 months ie just over 3 years with no interest.


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## Bronte (19 Dec 2012)

paulcoade said:


> tallpaul , you've got it spot on there , totally irresponsible and certainly no foresight on my part . I got it all wrong and will not be so reckless again.


 
Well this is refreshing Paul as I too agreed with tallpaul but did not wish to post for fear of backlash. He was only telling it like it is. 

You've made mistakes, there is nobody in life who has not made mistakes. But we can learn from our mistakes and honestly admitting them is a very good start. 

I'm worried about the debt management agency. What is the exact arrangement you have with them? And I wonder too is it the best solution for you. For each of your debts including mortgage can you post up the interest rates, the minimum payment etc. What is your fee to the DMC. Have you signed a contract with them. It's strange that you're focused on one interest rate on one card, is this debt not included with the DMC?

Also what amount of interest are you paying on your mortgage versus capital. If you've the energy the money makeover section would be a very good idea.

Demoive gave you advice on what to do which is basically to stop paying and negotiate, I don't think in your circumstances this would work.  It generally will work where someone is out of work and/or patently cannot service the debt, we don't know that here yet.  

Another question Paul, why didn't you go to Mabs instead of the DMC?


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## Bronte (19 Dec 2012)

tallpaul said:


> Frankly the OP's post is a case study in why the country is in the mess it is in. Irresponsible lending on both sides, no seeing the future or the bigger picture, a rush out of school to start earning the big dosh to spend spend spend... I could go on.
> 
> .


 
Actually this is a very timely warning, not to the OP but to others who read on here and may this xmas decide to go hell for leather on the credit cards. Today one is sickened to see Bank of Ireland raise their interest rates by up to 4 %. My views on banks are well known so I won't vent on here of what I think of the BofI today. 

People be careful. There is no need to go mad, no need to spend lots to make xmas good. A thoughtful cheap present is as good as any expensive gift. There is no point overspending to end up in more debt and pain and misery in January. If you don't have a lot of money for young kids the pound shop is brillant. When my kids were very young the box or wrapping the present was in was often more fun than the present. Penneys is great for clothes etc.  There are other options out there than credit card spending.


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## RichInSpirit (19 Dec 2012)

I wouldn't feel any remorse about burning a credit card provider. (Speaking figuratively of course. )

They are an insidious form of debt, often times in the past people were sent pre approval for credit Cards completely unsolicited.

And even the example this morning of BOI increasing it's credit card interest rate by up to 4% on the January bills, shows that they don't have your good interest in mind.


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## demoivre (19 Dec 2012)

bacchus said:


> As must as i respects your posts, i can't agree with this one... It seems to easy to spend money and let the others pick up the tab. What if the rest of the country do the same?



Then the powers that be in Europe and Ireland might wake up and realise that household debt is not going to go away in a hurry. We need Quantitative Easing for people to get the consumer spending again !


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## demoivre (19 Dec 2012)

tallpaul said:


> Frankly the OP's post is a case study in why the country is in the mess it is in. Irresponsible lending on both sides, no seeing the future or the bigger picture, a rush out of school to start earning the big dosh to spend spend spend... I could go on.
> 
> A prime example of why there should be no debt forgiveness in this country.



Irresponsible lending with the blessing of the Central bank, Regulator and Government, and irresponsible borrowing. The irresponsible lender gets bailed out and the irresponsible borrower gets brought to court to pay up ! Meanwhile the economy goes down the tubes largely because of the implosion of consumption expenditure as households service debt.


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## orka (19 Dec 2012)

vandriver said:


> It's not as bad as you think!Your minimum payment decreases every month so you will not pay 120 grand.If you keep up the 250 a month ,you should have it cleared in 5 years.





vandriver said:


> *Quote* Vandriver , 5 years is correct if all interest was frozen . 42 years sounds right if interest is left on to compound - I just think its astonishing that a ten grand debt can end up costing 123k ! (In process of freezing the interest so hopefully in 5years I can be free! ).





vandriver said:


> I don't need to be corrected,when what I originally posted was correct.You have entirely missed my point that your minimum payment *decreases* every month.I never mentioned freezing interest because the interest doesn't need to be frozen for you to pay off the cc in 5 years.If you take out a calculator,and divide your 10 k by 250 you get 40 months ie just over 3 years with no interest.


 Vandriver, you are correct in pointing out that the minimum payment reduces so the amount paid back is never going to be anywhere near 120K but at minimum repayment amounts, it will take a very long time to pay off the debt. In theory, just paying the minimum amount each month means that the debt will NEVER be paid off – because you are paying off a % of a reducing amount.  I suspect there might be a minimum minimum payment (maybe a flat €5 or €10 once the % minimum amount dips below this) which drives the calculation of a sensible(!), finite number of years to pay.  
On a 9,500 outstanding balance, a 250 per month minimum payment is a charge of about 2.5% of the outstanding amount.  Assuming a monthly interest rate of 1.5% (seems about standard for credit cards), each month the amount outstanding goes up by 1.5% and down by 2.5% - so the net paid off each month is only 1% (€95) of the amount outstanding that month.  At that rate, it would be 69 months (almost 6 years) before half the original amount was paid off, 138 months (almost 12 years) before 75% was paid off and 229 months (just over 19 years) before 90% was paid off.  Now the amounts will be much small at that stage: €950 outstanding, minimum payment about €24 and monthly interest of about €14 – but it will still theoretically be chugging away.  And it is this that allows the credit card companies to put the scary long-term numbers up showing that you really should pay more than the minimum per month or you will owe them forever...


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## AgathaC (20 Dec 2012)

OP it appears that I picked up your question incorrectly, apologies, my reply probably seems naive. 
I wish you all the best and hope that things improve for you.


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## paulcoade (21 Dec 2012)

Thanks again for all the feedback.
When I get a few minutes to go through it I will put up answers to more of your questions.

For now though Orka , I worked it out (calculated the interest on a reducing balance basis as each payment is made) and vandriver is absolutely right , it would take 4years 11 months to clear at a rate of 17%p.a. IF I kept paying €250 every month . The minimum payment calculation you made with percentages is brilliant and I will sit down and work it out for my own case as a cash amount and time scale calculation if I get a few minutes this week. This is how it would work out if I kept the payments at €250.
Balance €9500 rate 17% , repayments €250 p.m.
Year1 . Repayments €3000 , interest €1615 , Balance reduced by €1385= €8115
Year2 . Repayments €3000 , interest €1379 , Balance reduced by €1621= €6494
Year3 . Repayments €3000 , interest €1103 , Balance reduced by €1897= €4597
Year4 , Repayments €3000 , interest €781   , Balance reduced by €2219= €2378
Year5 , Repayments €3000 , interest €404   , Balance reduced by €2596= €-218 

Thanks vandriver for pointing it out and helping me to see it more clearly. 
Originally when I read the card statement I assumed , with compounding interest and the feeling I've had the last few years of paying and paying without seeing much decrease in balance , that it actually was true and it could take that long . I also assumed they meant the monthly required repayment but now I reckon they mean the reduced monthly payment that the debt management company have been passing on which is €127 . 
I will be call them to try and find out more about these type of warnings and how they are calculated on their side.


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## Bronte (21 Dec 2012)

paulcoade said:


> When I get a few minutes to go through it I will put up answers to more of your questions.
> 
> .
> I will be call them to try and find out more about these type of warnings and how they are calculated on their side.


 
This is all very interesting but instead of finding out how they calculate interest wouldn't you be better off concentrating on paying down debt in the best way possible?  Starting with the interest rates on your cards and your arrangement with the DMC.


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