Why ever pay off a card?

joeparnell

Hi, unless I'm missing a trick I cant see why you would ever pay off debt on a card...

You've got X amount of debt on a card, your 0% deal comes to an end. There are plenty of cards offering 0% (3% fee) for 12 months on balance transfer out there. Why not just transfer, and have the additional cash in your savings account earning 6%??

The only situation I can possibly think of where you would want to pay it off is when you're going to apply for a mortgage and they would prefer you debt free...or unless you couldn't get another card with 0% balance transfer which is unlikely...

Am I missing something or am I correct?

lisyloo

Why not just transfer, and have the additional cash in your savings account earning 6%??

Because may of us pay tax on savings.
So (for example) if you pay 40% tax, then you would get 3.6% interest net, which is hardly worth it.
Now there are tax free ISA, but some of us have used them up already.

Am I missing something

Mainly income tax on savings interest.
Some people pay tax at 0%, some 20% and others 40%.
Spouses can transfer money between them so if one doesn't work then it's fine.

But for a 40% tax paying couple, then it's really not worth bothering IMO bearing in mind that you need to make payments on time, manage the cards and have a credit chcek on your records.

joeparnell

Aha didn't think of that, thanks!