What's the most cost effective strategy for paying off a 0% credit card?

fillyjonk

Ok we have £8000 in credit card debt. This is obviously not good but we have seen the error of our ways etc.

The debt is on a 0% card for the next 18 months, an we plan to just keep moving it til its paid.

If we stringently and boringly budget we have around £300 over a month. This is not completely fixed and some months it will be more and some not.

What would be the best way to use it?

a. Just pay off the debt directly and gradually

b. Put the money into some sort of saving account to accrue pay off as a lump sum (what type? I've never had savings so don't know about these things!)

c. Overpay on the mortgage and then get the money out of the mortgage somehow (eg by increasing the term)

d. Something else

Thanks for all thoughts?

Odette

TBH if its 0% for 18m you can do what you like as long as a) you meet the minimum payments and b) pay it all off in 18 months!

If this was me I would set up a DD for a figure I could easily afford, £100 seems reasonable for you. And just let that go out for 8 months. However in 8 months time it will be Christmas so maybe pay off a little more now.

I'm sure other people will be along soon with more opinions.

BigCraigJohn

I guess Id chuck as much at it as possible without making yourself short in other areas. Can't really suggest much more. Thing is you might not get another so the less left after 18 months the better.

kazwookie

Pay off what you can now.

You may not get another 0% deal in the future

You may not get an increase on your mortage in 18 months time.

Who knows what the leading situation may be like then.

mi_jardin

Ditto the last two posts, surely pay off as much a possible just in case your situation changes or you are unable to move it again. I know I'd feel better with less debt hanging over me.

cgk1

Set up a direct debt to make sure the minimum is paid and then every month set up a direct debit to try and overpay it.

Debtfreein2011

Set up minimum payment direct debit and then at the end of each month pay off whatever else you can for that month.
I would strongly advise against saving up to pay off in a lump sum in case it then doesn't happen. Once a payment's been made, there's not getting the money back so I find that's the best thing to do for an amount you know you can afford.

fillyjonk

Oh dear, why would we not get another 0% deal? We were kind of relying on that, as we have no way of paying it all off in that time.

We do have "good" credit ratings and so forth-do they not tend to want to hand out two consecutive 0% deals, or do you think there might not be such deals in 18 months?

MrsTinks

Because no-one knows what might happen with the lending criteria in the current financial climate! 3 years ago almost anyone could have a 100% mortgage and sometimes for way more than 5 times their salary... try getting one of those now
Yet back then all seemed rosey... NEVER rely on being able to get more credit at 0% so personally I'd stick the money in a savings account and make the minimum payments - then when you get close to the end of you 0% start looking round for another card and use your savings to pay a lump off the debt. If you can't get a 0% you will still have a lot less debt, but you will actually help your credit worthyness by having had a savings product and making regular payments into it... Creditors like that and you migth end up with "excellent" ratings by then - which would help your chances regardless of the climate if that makes sense...

fillyjonk

Think the savings idea is what I'll probably go with.

The only thing I'm thinking, is from what I can see savings rates are not great atm. Am I right? I'm not that clear about such things, but they don't look that great.

MrsTinks

No they're not - but 1% is still 1% more than you would get if you paid the money straight off the 0% card