Big help needed!!

bundi

Me and my hubby are saving to build a house. We currently are paying off a loan of £20k which we manage to do quite comfortably. Along with this we currently owe about 10k on the dreaded credit cards:(

My husband has been short paid from wk, and is due to get a lump sum of approx 10k soon.

If we use this to clear the ccard debt, we have no savings and would be about 5 years before we can do anything with our house. We would love to hold onto it, as a bit of security, and something to fall back on and we hate of thought of it being dead money straight away. On he other hand we still have the debt of the credit cards.

Would we be wiser to use the 10k and pay the cards off, or add another 10k to our loan, and work it that way- I suppose then the old credit rating would be in a better shape over the next few years, and we would still have savings??

Any help, advice or opinions would be great.

Thanks

[Deleted User]

It depends on the interest being charged on the loan, the CC's and what interest you would get on the 10k if you saved it. Given savings accounts aren't offering good rates at the moment, you will undoubtably be paying higher interest on the CC's than the money could earn elsewhere. Unless your cards are currently on 0%, or you can transfer the balance to 0% cards.

My advice would be to pay all the CC debt off if you can. Or pay half of while saving the other 5k for emergencies etc as you have no other savings and transfer the remaining balances to 0% if your credit reference agency reports are good and you can get this rate and pay them off in time for 0% ending

Fang_3

Pay off your credit cards and cancel them, and then save the money that you had been using to make the repayments into your emergency fund.