Pay off Debts or Put into Savings?

tleefox

Good morning everyone Apologies if this is the wrong forum!

My partner and I have recently put our house on the market and are hoping to be moving within the next few months, obviously dependant on us selling the house.

I am in the fortunate position where over the next few months I will have a bit more income at my disposal, and am unsure what to do with it.

My debts at present are:

£1900 on a Virgin CC - 0% until November 11
£2000 Nationwide authorised O/D - something like 19%
Approx £5000 outstanding Student Loan.

My question is, am I better to pay off these debts to improve my credit rating and have less debt against my name, or am I better to put this into savings so that when it comes to us buying a new place we have more of a deposit?

[Deleted User]

Good morning everyone Apologies if this is the wrong forum!
Good morning, and right forum

My partner and I have recently put our house on the market and are hoping to be moving within the next few months, obviously dependant on us selling the house.

I am in the fortunate position where over the next few months I will have a bit more income at my disposal, and am unsure what to do with it.

How much do you currently pay towards the 0% debt? (min payment? If so how much is it, and what will the outstanding balance be at the end of your 0% deal at the current rate of repayment?

My debts at present are:

£2000 Nationwide authorised O/D - something like 19% As this is the debt that's costing you the most at the moment, it would make the msot sense to overpay as much as you can on this one until it's completly repaid - are you in a position to repay this one in full befire Virgin start charging on CC

£1900 on a Virgin CC - 0% until November 11 Do you know what the APR will be after November, what the outstanding balance wil bethen (at your current rate of repayment)

Approx £5000 outstanding Student Loan. Would only consider overpaying on this when all other debts are gone

My question is, am I better to pay off these debts to improve my credit rating and have less debt against my name, or am I better to put this into savings so that when it comes to us buying a new place we have more of a deposit? Definately worthwhile, having less debts, and less credit available to you. But obvaiously having a good deposit is also important.

Best rule of thumb is to pay of debts before saving if you are being charged a higher APR on your debt than you would be recieving on your savings - I'd be very surprised if you could get anything near the 19% you are currently being charged by Nationwide (more likely 3% or if very lucky 4%) - pay this of and reassess depending on Virgin card (what the new rate will be, how much is left outstanding, whether you can transfer it to another 0% deal before this 0% comes to an end etc)

HTH

D9

tleefox

Thanks for the reply D9 - see below.

Domino9 wrote: »

How much do you currently pay towards the 0% debt? (min payment? If so how much is it, and what will the outstanding balance be at the end of your 0% deal at the current rate of repayment?

It varies from month to month, but as a minimum I will pay off £50 which is double the minimum payment.


£2000 Nationwide authorised O/D - something like 19% As this is the debt that's costing you the most at the moment, it would make the msot sense to overpay as much as you can on this one until it's completly repaid - are you in a position to repay this one in full befire Virgin start charging on CC

Probably not repay in full - see note below.

£1900 on a Virgin CC - 0% until November 11 Do you know what the APR will be after November, what the outstanding balance wil bethen (at your current rate of repayment)


My question is, am I better to pay off these debts to improve my credit rating and have less debt against my name, or am I better to put this into savings so that when it comes to us buying a new place we have more of a deposit? Definately worthwhile, having less debts, and less credit available to you. But obvaiously having a good deposit is also important.

Best rule of thumb is to pay of debts before saving if you are being charged a higher APR on your debt than you would be recieving on your savings - I'd be very surprised if you could get anything near the 19% you are currently being charged by Nationwide (more likely 3% or if very lucky 4%) - pay this of and reassess depending on Virgin card (what the new rate will be, how much is left outstanding, whether you can transfer it to another 0% deal before this 0% comes to an end etc)

HTH

D9

Over the past few months I have been doing a lot of overtime which gets paid to me every 3 months, and I will continue to do this for the next few months. As this is extra money to me I would like to use this to tackle my debts.

If I was to focus on the C/C I would hope that this would be at least down to £500 by the time the 0% comes to an end.

With the overdraft, I would probably be able to get that down to £500 by the same point.

Given the interest rates on the overdraft I think I will probably focus on that one first. Like you say, I can always transfer the C/C balance to a 0% card in November?