Pay Off Canadian Debt with Canadian RRSP Savings?

Spurnblat

Hi there,

I moved back to the UK almost a year ago after living in Canada for the last 15 years. I had some debt before I left Canada but managed to accumulate plenty more while moving continents. I'm currently making more than the minimum payments each month but - as I don't have a UK credit card yet - I'm still using my Canadian VISA for some things so the balance has remained fairly steady. After a Canadian friend started berating me for having debt I started looking into the problem and came across this site. I've been through a lot of the articles and learned a lot but have a question which may be particularly Canadian in nature.

I don't have anything in the way of savings at the moment but I do have a Canadian RRSP. (Registered Retirement Savings Plan) As far as I can tell this is similar to a pension but is a bit more flexible. I have control over which investments my funds are spent on and can withdraw money from it if I wish. Of course, as the money that goes into an RRSP isn't taxed, the government taxes you on any withdrawals you make prior to retirement. As far as I can tell from the legalese at http://www.cra-arc.gc.ca/E/pub/tp/ic76-12r5/ic76-12r5-e.html the tax withheld for a resident of the UK would be 25%.

So, here's the situation:

Canadian VISA: $-18,863.52 (+£612.49 flight home for Christmas +£600 approx car insurance renewal) @ 19.5% annual interest w/ $22,000 credit limit
Canadian Mastercard: $0.00!!! (paid off last month) @ 18.5% annual interest w/ $2,000 credit limit
Canadian Line of Credit $-9,909.37 currently @ 7.75% annual interest (prime + 1.75%) w/ $10,000 credit limit

Canadian RRSP: $28,365.67 @ 8.88% over the last 12 months

As I understand it, if I withdraw all of the money from the RRSP I would receive $21,274.25 or thereabouts which would nicely pay off the VISA and let me focus my payments on the much lower interest rate line of credit. However that does mean that I've ditched that portion of my retirement savings. I turn 29 in a couple of days though so I still have 30 years to save for retirement and I'm currently single with no kids to worry about!

Hoping there's someone here who knows a little more about international and retirement finances that I do and can give me some suggestions before I head over there for the holidays!

Thanks,

Ben.