Pay down credit card or overpay mortgage..?

Cazzr

Ok, so have about 5k of credit card debt (currently on 0%) and have a mortgage currently sitting on SVR at 3.89.

We have the means to pay down an extra 400-500 a month at the moment, soon to be more when my son starts school in September and I wonder, are we best to pay down the credit cards as quickly as possible or chuck it at the mortgage?

I'm kinda torn as we'd love to be down to just the mortgage but if taking Martins tip of paying the one with the most interest we should overpay the mortgage, tho there would obviously be an approx 3% fee to transfer the credit card debt to another 0% when the current interest free period ends and I guess it is never garraunteed to be able to get the deal, tho currently in good position job wise for both of us...

Thoughts?
I'm thinking overpay mortgage or 50/50 but would love to be free of the credit cards.
Caz

p.s. house is currently on the market and plan to move into rented for a bit so if we sold the house, the point would be moot.

rustybucket

No, pay the credit card off. In 10 months that debt has gone whereas your mortgage even if overpaid will still be around for some time.

Cazzr

That was my thought really but I guess I wonder if we end up staying put and want to remortgage, getting the equity up would be a good thing, or would the credit card debt count against the equity anyway...?

coldstreamalways

Unsecured debt will count against you when trying to remortgage. Pay off the CC then you'll have oodles of cash once it's gone, to pay your mortgage with. That's my plan!

Fortheloveofmoney

As your credit card is currently 0% I would put the extra money in to a savings account and just pay the minimum on the card. Then pay off a lump sum (or clear completely) once the 0% deal runs out. That way you are earning interest on the saved money which will give you more to pay off the credit card.

Once you have enough saved to clear the card, then start paying down the mortgage.

That's what I did with my credit cards.

purpleheather2810

I agree with pp, start putting the money into a savings account and then, just before the 0% deal finished pay it off and any surplus at that point can go towards mortgage.

Cazzr

thanks for the advice, will stick with blatting the cards. one of the credit cards ends it's deal in oct, the other ends in jan. I think I can pay the Jan one off by then so will throw the money that way and transfer the october one when the time comes. They are fairly evenly split between the two.
Can't wait to be free of the horrible things.

foxgloves

I'd definitely get rid of the cards as if you need to move house or anything, it'll go more in your favour if you don't have any other bits of debt knocking around. Also, as someone else says, yoou have the chance to get rid of an annoying smaller debt completely, whereas you have to chuck a lot at a mortgage or do it over a very long period of time to make much of an impression. Psychologically, too, it'll be a boost to see an end to some credit card debt.

Cazzr

thanks, feel more secure in the decision now.