Using credit card as a savings method?

heppy23

I am trying to save £300 for something.
I have various savings accounts (postal isa, internet savings etc).
I also have a capital one credit card. This is running at about £1400 with a credit limit of £1500. I pay £20 a week to it by standing order which keeps on top of the minimum payments and creeps it all down.

I was going to start building the £300 in one of the savings accounts but I had the idea of using the credit card as a mini "offset account" - as I build the £300 I will reduce the interest I am paying by more than the interest I would earn in any of the savings accounts.

Does this make sense or is there some sort of fatal flaw in my logic?

Although I will use the card to make the purchase of the £300 item I do not use it for anything else. It stays in the house and is used for the odd internet purchase so there is no danger of me using the £300 which is why I am happy to keep it in that "pot".

grumbler

heppy23 wrote:

Does this make sense or is there some sort of fatal flaw in my logic?

This makes a lot of sence unless interest rate on your credit card is less than 4%.

Pay off debts before saving
Martin, Where to start with savings guide

heppy23

grumbler wrote:

Pay off debts before saving

I knew someone would point that out.

However, the thing I am saving for will allow me to get back on track with my hobby and as a sideline should generate some cash. (I need some racking for my garage to sort out my collection of vintage scooters. While I am tidying stuff onto the new racking I will make a pile of surplus stuff to sell.

Andy_L

What your talking about is called "stoozing". There's an article here:
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1076883546,34894,
and a discussion thread here:
http://forums.moneysavingexpert.com/forumdisplay.html?f=95
and it's own web site here:
https://www.stoozing.com

Your best move is shift your capital 1 balance to a new 0% interest rate card as that will save you far more in interest than offseting with your savings

heppy23

I'd love to be a stoozer but I am stuck with the cap one card because of my bad credit rating.