debt repayment/savings

thyme_2

hello,

I want help with this quandary please:

I have reduced my credit card debt to just over #700.00 by utilising savings last year. I am waiting a 0% balance transfer for nine months to complete. Do I reduce my payments when that has been done to #100.00 per month and increase my savings (+ my bank account is low too after Xmas which is a little uncomfortable!) or do I continue paying what I am paying now which would make me debt free by May? Ideas any one please?

sammy115

If it is interest free for nine months, why don't you pay the £700 off over the nine months. Its interest free! And increase your savings.

Little_Miss_Winner

I agree with Sammy. If it's interest free for 9 months it works out to £77.77 per month.
So I would only pay this, then put anything else into savings.

There is no point leaving yourself short to rush too pay it off, when you are not being charged interest anyway.

Regards
pot

Xbigman

I totally disagree. This is not the way to 'use' 0% cards once you are in this situation.

Pay the minimum payment by direct debit on the 0% card. You are not trying to reduce the balance just keep it alive. Also, cut up the card so it cannot be used. You must not spend on it as then min payments pay off the transfer money and you pay interest on your spending.
MEANWHILE. Put all spare cash in your savings and earn interest on the money you are saving. When the 0% runs out you should have over £700 in the bank. Pay the card off, then cancel it. You pocket the interest on the £700.

A final word of warning. You need to be disciplined and not spend the money in the savings account because you need it to pay off that card.
Regards


X

thyme_2

Three answers food for thought! Reason I hadn't used nine months was to avert ANY possibility of me getting caught out. But I had not thought of just paying minimum payment which would be approx 18.00 per month and saving the rest and then paying about 569.00 at the end of the 0% period if my math right. I have only been using my existing card for expediency and now on net will not let even 1 day go by without paying it straight off and I do know about not touching the 0% one. That useful info had already been noted off these pages.

I might act on eight months time scale to be safe - If I pay 100.00pm into saving account that will still leave me more than enough over to top up my bank account and leave me comfortable for paying for extras over and above my bills. So thanks very much for the help - mucho appreciated

make_life_easier

well said Xbigman. :A

thyme I'm glad you have cottoned on so quick ,this is the way to become debt free and make money out of the banks who have conned most of us in our life time. Good luck

Kevicho

if X hadnt said that i would have said the same thing

Usually it is best to pay off debts rather than build up savings, this is to minimise on the interest paid, however in this case there is no interest

You do have to be honest with yourself on this though, are you disciplined enough to follow this plan?

If not you may end up in more debt, cut up that card straight away!

thyme_2

Certainly am! I am already looking for best place to put the money and watching out that I can withdraw the final amount to be debt free at end of the eight month. I pay my credit card online as soon as I get paid it is my top priority payment. I shall be saving well over the amount needed too so I shall only use my existing credit card for online purposes. I have paid back instantly firstly by cheque for a while now and as I am online with my bank now I just transfer the same day to the credit card. Its a good feeling with the end in sight!!

magentadreamer

You might like to try the Newcastle BS Their online savings account has a pretty good APR