high interest credit card

[kia cat]

a mate I work with has one of these, [can't get credit elsewhere type of card] he's slipped behind with the repayments, now he can't catch up. I've told him his best bet is to cancel the card and the company should then freeze the amount he's in debt [ie not keep adding to it each month - interest or other charges] so he's paying it off and getting somewhere reducing the debt he owes.

He thinks he'd like to keep the card going, in case he needs it, although at present he's not reducing the amount outstanding [we're talking about a £600 debt and his repayments are around £40 per month]

[VHG]

If he wont cut up or stop using his card he is not helping himself.

If he has a high interest card he has obviously had money problems before so he sounds as though he is his own worst enemy.

Also, if he cancels the card I dont think they freeze the debt, they will keep adding interest each month until it is paid off.

In fact because they add interest each month you are paying interest on the interest on the interest on the interest etc.

Which is why anyone with a large debt on their credit card is being rather silly (and why the banks love people like that).

Best thing he can do is cut up his card, but he wont.

[bednobs]

i think you are wrong in saying by cancelling the card they will freeze the amount - interest will just keep adding each month

[rowanwitch]

He can however write to them explaining why he is in difficulty asking them to suspend interest as he is unable to clear the amount. It would mean the company will suspend the credit facility. Debtline have a letter template on their website which is very good.

[Old_Geezer]

How can he think of needing something he is already out of control of ? He is not thinking straight.

He needs to explan the situation, and in the meanwhile in his shoes I'd get advice, probably from Citizen's Advice as a first port of call. He needs to budget, he needs his lenders to realise they won't be able to get blood from a stone, and so offer an arrangement. Or perhaps he can declare himself bankrupt ? Seems extreme for £600 but may be worth bearing in mind if he can't turn it around.

[johnk]

He needs to cut the card up and pay off the loan as soon as poss but as he sounds like an idiot I'm afraid there's no hope

[kia cat]

Thanks all for great advice. I've got a letter for him, will get his details and get it moving.