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‘She trusts me completely’: My sister offered to pay off my credit-card bill. I’ll repay her over the next 4 years. Am I taking advantage of our relationship?

‘She trusts me completely’: My sister offered to pay off my credit-card bill. I’ll repay her over the next 4 years. Am I taking advantage of our relationship?
Written by Publishing Team

Dear Quentin,

I have little money. It is strictly my fault. I ran out of credit card bill, almost maxed out. I am nearing the end of the interest free period. My sister, through hard work, is very well off. She completely trusts me, and volunteers to lend me money because she hates paying interest and doesn’t want me to pay it either.

I accepted, and although she said it was unnecessary, I had a written contract that I was planning to notarize shortly before taking the money. I now have other ideas about borrowing money. It will take four years to pay her back. What if something happens during that time that results in me not being able to proceed with payments?

It does not have a fixed monthly payment. You choose an amount. She was giving me credit because that’s the kind of person she is. I would freak out, if it came to that. If I didn’t accept her offer, my good credit would still be bad and it would take longer to pay it off, but I wouldn’t feel as bad about being late to a company as I would my sister. What should I do?

Sister in debt

my dear sister,

Your sister offered you an interest-free loan. Take it. The average credit card interest hovers at 16.2%. If you have a $5,000 credit card balance, and you only pay $250 each month, it will take two years to pay it off and cost you $867 in interest.

Some tough love: Stop spending money on things you can’t afford, and ask yourself why you’ve accumulated credit card debts that you weren’t able to pay. Otherwise, history will repeat itself. If it’s about budget, start now.

If you’ve been using your credit card to fill a larger, more empty space in your life—and you can be forgiven for feeling low or alone for the past two years—ask yourself how you can become more connected.

Consider reaching out to people who may be more isolated and/or descended from you — an elderly relative or neighbour — and ask them what you can do to help. It will do more for you than any Amazon package.

It was smart to suggest a notarized loan agreement, and not hold your sister responsible for bringing it up. Provides security if the relationship between the borrower/creditor deteriorates, or the idea fades, the borrower dies in the meantime.

Don’t hit yourself. Your sister trusts you to return that money in a timely manner, but she doesn’t want you to make the worry between the credit card company and your sister. Your sister loves you. She wants to help you.

If anything good comes out of this case, so be it.

Iu You can email The Moneyist with any financial or ethical questions related to the coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell at Twitter.

Check out Moneyist’s Facebook page The collection, where we look for answers to life’s toughest financial problems. Readers write to me with all kinds of dilemmas. Post your questions, tell me what you want to know more about, or consider my latest Moneyist column.

Moneyist regrets that he cannot answer questions individually.

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