Personal Finance

Advice for Senior with large balance on high interest rate credit card

  • Last Updated:
  • Sep 11th, 2021 3:20 pm
[OP]
Newbie
Jul 30, 2008
47 posts
8 upvotes

Advice for Senior with large balance on high interest rate credit card

I am trying to help a Senior citizen (82yrs old) who has a high interest rate credit card with a large balance. The interest rate on the credit card is 19.99% and the balance is $12,500. Senior lives in apartment that is $1200/month and their income is approximately $25,000 per year (Canada Pension and company pension).
They don't really have any assets - though , they also have no other debts. The 19.99% credit card is with CIBC - though they don't do any other banking with CIBC. I believe they have had the credit card for about 15 years - though most of the balance was put on card about 4 years ago. They have a TD Bank account and do most of their banking (which is not too much) with TD. I believe they have been paying around $200 month on the credit card for last 2-3 years. This $200 payment would just be covering the interest. I know this is not a good situation :( I believe they have good credit - though I do not know their actual credit score.
.
I suggested they could try and get a lower interest rate credit card. Perhaps, say with a 12.99% interest rate
and then up their monthly payment to $400. Paying $403 per month at 12.99% would pay of the $12,500 balance in 38 months. Or perhaps they should try for personal /unsecured $12,500 loan with TD ? Or possibly apply for a TD low interest rate credit card ? Are some credit cards (perhaps MBNA, or Amex) more likely to approve and offer a lower interest rate credit card ? Perhaps even offer a lower rate for 6 month period as promotion? Any other advice is appreciated - thx.
26 replies
Deal Guru
Dec 5, 2006
10667 posts
5665 upvotes
Markham
Will you the one who will manage their payment? The reason I am asking is for that age, don't make things too complicated. Such as BT every 6 months kind. Just tell them how much they pay (such as pay 400 every month). If you will help them regularly, then it's different story

Another thing to consider is whether they can afford 400 each month. It's probably easy for us, but might not easy for them

But since they have good credit and they won't get mortgage anyway,doesn't hurt to try. But you need help them transfer the balance to new card for sure
Member
Apr 16, 2015
472 posts
682 upvotes
CIBC does offer a low rate card (13.99%) with 0% interest for 10 months on balance transfers. It only requires a $15k minimum income. This may be the easiest route and there's no good reason not to at least contact CIBC and ask about this:
https://www.cibc.com/en/special-offers/ ... lsrc=aw.ds

But to be honest, at 82, they could just keep making minimum payments and not worry too much about ever paying off the balance.
Deal Addict
Mar 14, 2014
1032 posts
1346 upvotes
catsoncoffee wrote: CIBC does offer a low rate card (13.99%) with 0% interest for 10 months on balance transfers. It only requires a $15k minimum income. This may be the easiest route and there's no good reason not to at least contact CIBC and ask about this:
https://www.cibc.com/en/special-offers/ ... lsrc=aw.ds

But to be honest, at 82, they could just keep making minimum payments and not worry too much about ever paying off the balance.
Good post! Out of curiosity, I just roughly calculated what the senior has paid in interest by making minimum payments:

$200 x 48 months = $9,600

With continuing to pay $200/month, CIBC is likely in a worst case scenario going to get back the original principle amount through interest payments within the next 29 months. This is making a simplistic assumption that the principle amount was $12,500. That would make the person roughly 85 when interest payments will equal the original principle amount.

It's unfortunate the senior did not have someone 4 years ago to suggest product switching to a low-interest CIBC card.
Last edited by flyjazz on Sep 8th, 2021 8:00 pm, edited 1 time in total.
Deal Fanatic
Jan 19, 2017
5610 posts
3133 upvotes
ws6formula wrote: I am trying to help a Senior citizen (82yrs old) who has a high interest rate credit card with a large balance. The interest rate on the credit card is 19.99% and the balance is $12,500. Senior lives in apartment that is $1200/month and their income is approximately $25,000 per year (Canada Pension and company pension).
They don't really have any assets - though , they also have no other debts. The 19.99% credit card is with CIBC - though they don't do any other banking with CIBC. I believe they have had the credit card for about 15 years - though most of the balance was put on card about 4 years ago. They have a TD Bank account and do most of their banking (which is not too much) with TD. I believe they have been paying around $200 month on the credit card for last 2-3 years. This $200 payment would just be covering the interest. I know this is not a good situation :( I believe they have good credit - though I do not know their actual credit score.
.
I suggested they could try and get a lower interest rate credit card. Perhaps, say with a 12.99% interest rate
and then up their monthly payment to $400. Paying $403 per month at 12.99% would pay of the $12,500 balance in 38 months. Or perhaps they should try for personal /unsecured $12,500 loan with TD ? Or possibly apply for a TD low interest rate credit card ? Are some credit cards (perhaps MBNA, or Amex) more likely to approve and offer a lower interest rate credit card ? Perhaps even offer a lower rate for 6 month period as promotion? Any other advice is appreciated - thx.
How is the person's health? Is he going to live a long time? If not, just forget it. When a person dies, all debts will be written off.
Jr. Member
Dec 3, 2019
169 posts
87 upvotes
There really is no need to make any payments at all.
The senior really does not need low interest credit products like a mortgage, so there really is no reason to have good credit.

Don't view the decision of not paying credit card back as morally wrong.
Treat is as a business decision, the senior and the credit card took on risk and it didn't work out.
It wasn't morally wrong for credit card to issue 12k of high interest credit to an 82 year with no real income.

For 12k the credit card will not bother to try to recover it by going after assets.
Member
Apr 16, 2015
472 posts
682 upvotes
I was just looking at CIBC's low-rate card and the 0% balance transfer may not apply if transferring from another CIBC card (the terms aren't entirely clear). If not, MBNA has a 12.99% card with 0% for the first 12 months: https://www.mbna.ca/en/credit-cards/low ... astercard/

The only thing with MBNA is how to make payments if the senior isn't comfortable with online banking. I guess you could help them set up a regular recurring payment from their TD bank account.
Member
Apr 16, 2015
472 posts
682 upvotes
buysellbuy wrote: There really is no need to make any payments at all.
The senior really does not need low interest credit products like a mortgage, so there really is no reason to have good credit.

Don't view the decision of not paying credit card back as morally wrong.
Treat is as a business decision, the senior and the credit card took on risk and it didn't work out.
It wasn't morally wrong for credit card to issue 12k of high interest credit to an 82 year with no real income.

For 12k the credit card will not bother to try to recover it by going after assets.
My only concern is if they had to find a new apartment, or telephone provider, or anything else that requires a credit check. So, tanking their credit entirely may not be a good idea, but there is certainly a case to be made for just making the minimum payments forever.
Jr. Member
Dec 3, 2019
169 posts
87 upvotes
catsoncoffee wrote: My only concern is if they had to find a new apartment, or telephone provider, or anything else that requires a credit check. So, tanking their credit entirely may not be a good idea, but there is certainly a case to be made for just making the minimum payments forever.
Just get another high interest credit card before stopping payments.
Deal Addict
Mar 14, 2014
1032 posts
1346 upvotes
catsoncoffee wrote: I was just looking at CIBC's low-rate card and the 0% balance transfer may not apply if transferring from another CIBC card (the terms aren't entirely clear).
I haven't done a CC product switch but assumed in the OP scenario that the balance on the card would move to the new low-interest card?
Member
Apr 16, 2015
472 posts
682 upvotes
flyjazz wrote: I haven't done a CC product switch but assumed in the OP scenario that the balance on the card would move to the new low-interest card?
Yes, I assume they can switch to the low interest CIBC card at 13.99%, but I'm not sure if they can also get the 0% promo rate for 10 months (which may only be available if they are transferring a balance from a non-CIBC card). But I could be wrong. It's certainly worth a call to CIBC to find out. If not, the MBNA card is a good alternative.
Deal Addict
Jan 13, 2014
1815 posts
753 upvotes
Calgary
Hi, you can take the senior to a local branch and have the credit card converted into a loan. Generally income isn't required for this as it's a product change. Payment should be right around $200-250 a month. Might give them a peace of mind. Pm me if you need more information. Thanks!
Member
User avatar
Jan 7, 2019
368 posts
370 upvotes
He's 82...Male life expectancy in Canada is like...85? Female is 87?

He has only a few more good years left and most likely he won't be getting any large credit requests in the future.

Let it go delinquent and have it go into collections. It's unsecured debt so CIBC will be happy with pennies on the dollar.
Remember to always Thumbs Up good responses! Spread positively.
Jr. Member
Apr 17, 2008
102 posts
5 upvotes
masarwar wrote: Hi, you can take the senior to a local branch and have the credit card converted into a loan. Generally income isn't required for this as it's a product change. Payment should be right around $200-250 a month. Might give them a peace of mind. Pm me if you need more information. Thanks!
Echoing this comment. I would call the bank and explain the situation. Most likely they will approve a debt consolidation loan at a lower interest with a condition of closing the credit card (or reduce limit)
Deal Fanatic
Jan 21, 2014
5837 posts
3244 upvotes
BrokeMillennial wrote: He's 82...Male life expectancy in Canada is like...85? Female is 87?

He has only a few more good years left and most likely he won't be getting any large credit requests in the future.

Let it go delinquent and have it go into collections. It's unsecured debt so CIBC will be happy with pennies on the dollar.
Those numbers will drop after counting all the COVID-19 deaths in the last 2 years
Deal Guru
Dec 5, 2006
10667 posts
5665 upvotes
Markham
BrokeMillennial wrote: He's 82...Male life expectancy in Canada is like...85? Female is 87?

He has only a few more good years left and most likely he won't be getting any large credit requests in the future.

Let it go delinquent and have it go into collections. It's unsecured debt so CIBC will be happy with pennies on the dollar.
You don't want a senior has peaceful life in next a few years? You want him to listen collection agency's lectures?
Deal Fanatic
User avatar
Nov 23, 2005
8735 posts
5081 upvotes
masarwar wrote: Hi, you can take the senior to a local branch and have the credit card converted into a loan. Generally income isn't required for this as it's a product change. Payment should be right around $200-250 a month. Might give them a peace of mind. Pm me if you need more information. Thanks!
Since when is converting a cc into a loan a "product change". Perhaps CIBC does things differently...

I work for big 5, and my team deals with exactly this amongst other things, and a loan application is always done when paying out any cc or other debt, and being put into a loan. Income would be required and app would need to fall within the lending tds/gds criteria. Given its a senior on fixed income, they would qualify for a exception rate of 8%.
Jr. Member
User avatar
Sep 30, 2018
154 posts
123 upvotes
Not sure if they could obtain a line of credit..if they could, that's probably the easiest way to reduce the interest payment. Any bank's line of credit should be much lower than a typical credit card's interest rate.
Deal Addict
Jan 13, 2014
1815 posts
753 upvotes
Calgary
boyoflondon wrote: Since when is converting a cc into a loan a "product change". Perhaps CIBC does things differently...

I work for big 5, and my team deals with exactly this amongst other things, and a loan application is always done when paying out any cc or other debt, and being put into a loan. Income would be required and app would need to fall within the lending tds/gds criteria. Given its a senior on fixed income, they would qualify for a exception rate of 8%.
I work for CIBC. Yes a loan app will be done through special loans team. Have done it in the past. As there are no new funds the underwriting is a bit relaxed.
Jr. Member
Jun 22, 2011
166 posts
61 upvotes
Ask CIBC to buy out the CC as a loan with lower interest terms, for debt consolidation. It's a common thing. No more CC for this man.

Or you can try getting the MBNA credit card that has 0% interest for one year on balance transfers, but it requires approval.

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