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My sister and brother in law have a single joint bank account with an arranged overdraft of £3,000 and they are, for all intents and purposes, maxed out on it. This means they are incurring charges of approximately £50 per month: £6 for an arranged overdraft and circa £45 in interest charges. This is bad enough but changes are coming which will likely increase this cost for them.

I thought a Money Transfer card would be a good option for them; for a fee of approx £120 they could clear their overdraft and pay off the card over a number of months at 0% interest. Unfortunately they were both declined.

I am wondering if I could get the Money Transfer card instead and have my sister and brother in law repay me. I earn £80,000+, I'm a homeowner, repay my credit cards in full in each month, and believe my credit score to be very good (although I haven't checked recently). Money Saving Expert's Eligibility Calculator gives me a 90% chance of being accepted for the Tesco money transfer card so I think there's a very good chance I would be accepted.

My questions are:

  1. Can I actually do this? Are there any legal/T&Cs reasons why I couldn't?
  2. Is it possible to transfer the money to a different account than my own? Even if not supported by default and the money had to be paid into my account, I assume there would be no reason why I couldn't transfer it to another account?
  3. How much is this likely to impact my credit score? Essentially I am taking on debt so I assume it will have a negative impact but I can't quantify by how much. For example if my credit rating is currently 800 would doing this put my score at 200? 400? 750? I appreciate the credit ratings are a bit of a black box but if anyone has any thoughts on this I would very much appreciate it.

I'm not concerned about taking on my sister and brother in law's debt, if I absolutely had to it would be manageable for me to clear it.

Any other advice you can offer would be much appreciated.

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    How would your relationship with your sister and BIL change if they stopped paying you back, while still living the lifestyle that drove them to this (thus piling on even more debt)?
    – RonJohn
    Commented Jan 20, 2020 at 16:46
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    It would be soured for sure. However I'm already kind of in this situation as I have already helped them out over the last 6 months with money and they are in no better of a position now than before. My intention is to agree some rules with them (e.g. setting a budget, monthly review of the budget, etc) in return for me doing this. I would therefore have more control than I do now which is very reactive (i.e. they have no money for food).
    – user93388
    Commented Jan 20, 2020 at 17:15
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    "My intention is to agree some rules with them (e.g. setting a budget, monthly review of the budget, etc) in return for me doing this." Color me... dubious... that this would actually work. Because of filial duty, I might do something like this for my family too, especially if they had children, even though I'd expect never to see the money again. If wish I could answer your questions.
    – RonJohn
    Commented Jan 20, 2020 at 17:29
  • Hi @user93388 - if no one with UK-specific expertise comes along, your first two questions might be most easily answered by calling the bank you're thinking about using for the money transfer card.
    – dwizum
    Commented Jan 21, 2020 at 14:55

2 Answers 2

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Fundamentally, your motives are at cross purposes.

You want to be loyal to your family, and get along with them, but also do money transactions with them. Those three don't play well together.

Don't take my word on it. Search this forum for discussions of family, money, and loans. ("Cosign" is another winner). Follow financial experts (like the US's Suze Orman or Dave Ramsey). You ask a question like this on their show, you get 100% lecture and 0% answer. I'll try to do a little better than that, but you've been warned.

have my sister and brother in law repay me.

I thought a Money Transfer card would be a good option for them; for a fee of approx £120 they could clear their overdraft and pay off the card over a number of months at 0% interest. Unfortunately they were both declined.

(comment) However I'm already kind of in this situation as I have already helped them out over the last 6 months with money and they are in no better of a position now than before.

That's signal you should heed.

My intention is to agree some rules with them (e.g. setting a budget, monthly review of the budget, etc) in return for me doing this. I would therefore have more control than I do now which is very reactive (i.e. they have no money for food)

And don't be pollyanna here.

As to your questions

  1. No. That transfer card can't be used across different people, because that defeats the purpose of the product -- which is to give you a favorable interest rate because of your good credit standing. Note that your plan would work if it were a plain cash advance, at likely higher rates. But that's not what that card is. In the US, balance transfers can pay off others' accounts (thanks RonJohn), but that's because they are simply cash advances.

  2. If it puts cash into your account, then you can do what you want with the cash.

  3. That's a VERY complicated issue. The answer probably is "not terribly much". Merely borrowing a small amount of money doesn't make you a bad credit risk. However, lenders are VERY concerned with multiple loans in a short time span, so this will probably prejudice any additional loans you get in the next month or so, even if it doesn't affect your credit score much. That's because lenders are not merely looking at the number as a threshold (>720 approve <720 deny), they are evaluating the data on your credit report as well.

If you MUST do this, then absolutely get a lawyer to rapaciously protect your interests, and do what the lawyer says. However, if you do, you'll probably get another lecture.

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    I feel you are using the excuse of a frame challenge to write a long essay about your own tangentially related personal views. Even though the OP did ask for any other advice, if that was literally all their question was it'd be "Primarily opinion based".
    – Ganesh Sittampalam ♦
    Commented Jan 20, 2020 at 22:50
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    US banks don't care whether or not you pay off someone else's card via balance transfer. to be technically accurate, US banks don't care what you do with a cash advance on a card. If you literally ask for an actual balance transfer, they will follow a different decision making process, which sometimes involves fact-checking about the account the balance is being transferred from. This allows banks to stop customers from doing things like bouncing a balance from promo to promo, or helping friends/family as per the OP's question. Some banks don't care, but some definitely do.
    – dwizum
    Commented Jan 21, 2020 at 14:54
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    @Harper-ReinstateMonica - I appreciate your zeal for frame challenging the question, but I'm downvoting because I don't think this is actionably helpful for the OP. Perpetuating the myth that people who are bad with money will always be bad and will always break agreements does nothing but allow people who are well off to continue to ignore or suppress people who have made mistakes. If you want to frame challenge, a more helpful way to do it might be to focus on alternatives to loaning the money that help the distressed couple improve their situation, versus just saying no.
    – dwizum
    Commented Jan 21, 2020 at 15:01
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    @Harper-ReinstateMonica let's take an example where I would think the activity is a mistake, like a question about how to buy bitcoin. I would either just answer the question, or ignore it. Not find some excuse to insert my (obviously correct!) rant about how bitcoin is a huge mistake.
    – Ganesh Sittampalam ♦
    Commented Jan 21, 2020 at 22:06
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    That said, I think a line or two questioning whether doing it is a good idea, along with the actual answers, would be fine in this answer. Just not so much material that (still) goes a very long way into pushing your personal opinion and not really answering the question.
    – Ganesh Sittampalam ♦
    Commented Jan 22, 2020 at 7:06
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When you take a money transfer on the credit card they will pay it into your bank account. After that point you have control of the cash and will be able to transfer it to somebody else's bank account if you wish.

Taking on a debt isn't necessarily going to have a negative impact on your credit score and in some cases can be an advantage as you're demonstrating your ability to manage repayments. Of course you have to make sure you make at least the minimum repayments each month, regardless for whether you get the repayment from the people you are lending the money to. There are a couple of things to keep in mind however:

  1. People who make several credit applications in a short space of time are considered to be a higher risk by lenders. So you may want to take this into account if you were planning to take out your own credit facility for another purpose within the next 12 months. After 12 months the credit search will effectively be invisible for the purposes of new applications after that point.

  2. Existing credit usage and credit limits will be taken into account for future credit applications for the purpose of assessing whether you can afford to repay. Since the amount you are talking about is quite low in proportion to your salary I wouldn't have thought this should be a major concern, however could be worth considering if you're planning to take out a mortgage for the first time in the near future. Also when you take out the card, you may want to choose the option to not accept credit limit increases automatically.

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