Rainy day threatens

afoolandhermoney

I've been lurking for some time and could now do with some advice.

Last year I had £2000 on my cc left to pay off (tuition fees for a course I was taking, now finished) this was on a 0% deal which expires next month. I worked out how much it would cost per month to clear this by the end of the 0% deal, and over the year I've been paying off a bit over the (initial) minimum as a standing order and paid the rest of this into a savings account.

I did this so I had a rainy day buffer whilst still keeping up with repayments, hoping that the rainy day wouldn't come and I could pay off the card before interest was charged

Unfortunately, clouds are building (even if its not currently raining). My contract at work is not being renewed (not been there long enough for any redundancy pay and being temporary I've not got any insurance in place). I'm fortunate that I've a new job to go to next month, I'm just worried that with another recession looming this will prove not to be long term either - its also less money than I currently make but will be enough to keep us (me, OH and 2 cats).

So my question is - should I use the savings to pay off the cc, or keep them for a possible/probable future rainy day whilst chipping away at the debt and accept that it will take me longer to clear than I'd hoped? (if i do this I'll look to shift it to another 0% and try to increase my payments a bit to shift it quicker)

Just wondered what the lovely DFWs thought of this.

antonia1

Hi, I would suggest paying off the credit card before you start paying interest, but keep the account open and credit available so that you can use it IF you need to.

danaharrison

i would shop about for another 0% cc deal and transfare the balance to that and then budget to pay as much of it off during the deal, that way u can keep u rainy day fund and still be chipping away at ur debt. u will normally pay around 3% one off transfare fee but that will be cheaper than normal APR, just dont spend anymore on it.

mrsb83_2

Pay off the credit card, apply for a new one with 0% on purchases and use that one if things get bad. Best case scenario, you pay off your credit card and don't have to spend on it again.

Tixy

If it were me I would first see if you can get another 0% deal. If you can I think I'd transfer again and keep your savings just for the short term in case it does start to rain. If you can't get a 0% deal (and your employment changes might impact on this) then I would probably go for paying them off and keeping the card to spend for emergencies (although obviously trying not to).

fracturedsun

I'm in a similar situation in that I am also in a temporary position and have debts. I keep a buffer in savings despite owing money on a loan, I do this because when I was unemployed a year ago my savings kept my head above water allowing me to make the payments I need to and giving me just enough to live on. It cost me more money but it allowed me access to cash, bear in mind that if you are unemployed nobody (barring family) will agree to give you any extra credit, so you need to have enough credit free or access to savings to see you through any period of unemployment.

I would suggest applying for another 0% card if you can and transfer the balance over, this means that you can keep your buffer for that rainy day and still not pay interest. If you can't get the 0% credit then make sure you keep the old card open if you do decide to pay it off so you still have access to some money. Try if possible to keep at least some emergency cash in savings, there are some things you can't pay for by credit card and cash advances are very expensive. Creditors are also more likely to lower the limit or close an unused card than demand payment in full on an exisiting balance.

afoolandhermoney

thanks all.

I've another card still open but with no balance, so I'll see if they'll offer me a 0% transfer. Might also try and get a 0% purchases for emergencies in the short term (likely to need some new clothes for the new job - haven't bought many in the past year and since I've lost weight most of those I have don't fit!)