pay C/C Bill with pension??

ricksExpensive

Hi everyone,

Used this site for a while looking at the tips but thought it was time i joined up, and also needed a piece of advice. Sorry for brief introduction.

I currently have a C/C with the bank of scotland with £2042 outstanding with 0% interest till may 07!

I am wondering if it is worth me stop paying into my pension and putting it towards paying off my C/C before my interest free time expires.

I currently pay off £200 a month on my C/C but with the extra money from pension is would be paid off before the interest then i can cut the thing up :j cause im a real impulse buyer. Clothes, meals you know the score :mad:

So is it worth cutting out 5 months of my pension to pay the credit card off!

My thanks in advance

tyllwyd

I think more information about your pension is needed before anyone could give you any advice. Is it a company pension or a personal pension? Is it possible to opt in and out? Does your employer contribute? How old are you, and are you confident that you have enough put away so far?

It would probably be worth asking on the pensions board for comments from their perspective. Personally, my feeling would be that if you can find £200 per month for the credit card bill, I wouldn't mess with my pension (and risk that if you stop, you never quite get round to restarting) - why not see if you can cut a bit more out of your budget between now and May, or try to get another 0% card. There are something like 6 payments between now & May so that means your balance should be around £1000 - so even at (say) 15% interest, if you keep up the £200 payments you should get it paid off in six months or so.

Oh, and remember that you get tax relief on your pension contribution, so the money you put away is worth more when it arrives in your pension than it would be if it was paid out to you in your pay packet (if you see what I mean). So unless you go back and replace the missed contributions you are balancing paying interest on your borrowing against paying tax of (I assume) 22%.

woohoo_postingid

ricksExpensive wrote:

I currently pay off £200 a month on my C/C but with the extra money from pension is would be paid off before the interest then i can cut the thing up :j cause im a real impulse buyer. Clothes, meals you know the score :mad:

You don't have to wait for it to be paid off before you cut the card up...

ricksExpensive

Thanks for reply tyllwyd,

I pay into a pension from my employer, and they say i can go in and out its called deffering or something??? Im 23 years old. Only been paying into pension for past 3 years or so at a rate of 6% or my take home per month.

I have already cut alot out of my monthly outgoings to budget the £200 a month the final thing will be to change Broadband and Mobile in march when my contract is up which will free up an extra £40 a month.

ricksExpensive

woohoo_postingid wrote:

You don't have to wait for it to be paid off before you cut the card up...

Its locked away safe incase have to make any urgent purchases! Like i needed 4 tyres the other month when someone slashed all mine and at £89 a pop that was a dear doooo.

ricksExpensive

Oh, and remember that you get tax relief on your pension contribution, so the money you put away is worth more when it arrives in your pension than it would be if it was paid out to you in your pay packet (if you see what I mean). So unless you go back and replace the missed contributions you are balancing paying interest on your borrowing against paying tax of (I assume) 22%

erm....... aint sure what you mean!

Before my take home i get taxed 22% , national insurance 9.4% and then pension 6%???????????????

If i removed my pension wouldnt i just have a sligh increase in NI to 11%?

CLAPTON

if you are currently paying 200 into a pension but decide not to pay it, the tax man will take 22% so you only actually get 156 per month extra in your take home pay....
also and you may need to check this, it looks to me your pension scheme is 'contracted out ' (of the state second scheme) and so you pay only 9.4% NI ....if as a result of not paying you become 'contracted in' you will pay NI at the rate of 11% on your income above the minimum for NI calculations (not just on the £200.)...i think you will find that you are less well off than you think.

i'ld stay in if i were you.