My Child Put $15,000 In New Credit Card Debt On My Account! Help!
What is the best way of handling credit card debt if they were incurred by your children?
Parents often take measures to help their children with finances. This is especially true during the first few years that they are in college. Or after moving out of the home. Putting children on a credit account or co-signing for loans are common actions parents might take. The purpose is to help children obtain financing for college or get a boost in their credit history. However, this type of help usually ends up in debt – from $10,000 to $15,000 to $20,000 or more new credit card debt. These are incurred by children on a credit card account and it can lead to financial troubles because the parents are left to handle the situation.
Start By Cutting Off Children Credit Card Usage
Parents who allow their children to access their credit card account and rack up a ton of debt are also able to remove children from the account. In some cases, it might be best to take children off the account if they show irresponsible spending habits. Parents will need to tell children that they are no longer able to use the card.
Those who are concerned about children’s financial situation might opt to provide cash, prepaid debit cards and gift cards to help children after they are no longer on the credit card account. This helps ensure the card does not end up over the limit as a result of an adult child’s difficult management of money or inability to make payments on the debt they’ve incurred due to lower than expected income.
Considering Repayment Options
Handling credit card debt incurred by your kids can be tough. After a child has accumulated high credit card debts, you need to act fast. It does not matter if it is on a parent’s account or the parents are helping them with their own accounts. The first management solution is actively looking at the situation to identify the best options to solve the problem.
The best solution often depends on the particular scenario and the parent’s ability to help children pay on the account. Since it is the personal account of the parent, they need to determine if they can afford it or not.
The options to get through the situation include debt management programs, budgeting, negotiating for a lower interest rate on the card, consolidating debt or settlement. The situation often dictates the best solution based on the number of debt the children have incurred. Of course, the ability of parents to pay for the credit cards is also considered.
Is Credit Consolidation A Solution?
Parents usually find that the incurred debts from children are not affordable due to the high-interest rates. This will lead to large payment obligations. This makes them want to consider credit consolidation. Consolidation is a type of credit relief solution that helps bring down interest charges or even helps write down the principal balance of more affordable credit card payments.
By reducing the payment in interest or cutting the principal balance, parents are able to manage the monthly payments without having major hardships. Consolidating debt is an optimal solution to handling the credit card debts incurred by children. It gives parents the opportunity to reduce the payment amount and provides the ability to help children understand finances and spending better in the future.
Depending on the particular credit relief program, the method of consolidation will vary. Parents who have a good credit score can get a consolidation loan. This is possible despite the child’s bad spending habits. Those who have less perfect credit or who prefer to work with the original credit card might opt for negotiation instead.
Regardless of the particular program, the best way of handling credit card debt is often consolidating them.
While handling credit card debt is part of the solution, it is not everything that you need to do. It is important to address the behavior that led to it. Parents worry about their children and want to help, but that does not mean putting up with irresponsible lending. Parents need to help their children understand responsible use of credit cards and options they might consider if the problem continues in the future on their personal accounts.