Advice wanted: savings to pay debt?

straynor88

Hi everyone, just wanting some advice. I'm 23 and at the moment I owe 500 on a Halifax credit card and have an almost maxed out Barclaycard credit card. I pay more than the minimum payments everymonth but this doesn't seem to be having an impact on the Barclaycard card. I have about £450 in savings; would it be better to continue saving or stop saving and use my savings to pay a chunk of the Barclaycard? I usually put £50 a month in to my savings account which could then also be used to pay off this existing debt.

Thanks in advance

McKneff

~As a general rule, if the interest you are paying on a credit card is more thn the interest you are getting off your savings, then pay it off.

I can almost guarantee that it is, the sensible thing would be to pay it off really.

Then every spare money you have after that will be savings and you will owe nobody nowt:j:j

camuk81

From what I have read the more you pay off even if its above the minimum is better as there is a section on the credit file thats says whether you just make the minimum. I believe the more you make the better it reflects on your credit file

Try popping into any search engine this is money credit card calculator and will calculate how much more you will save my upping or paying a bit more off

FreshPrincess

Absolute no-brainer here - PAY SOME OFF! You will likely be getting about £1 to £2 in interest maximum each month from your savings, yet no doubt you will be paying about £10 interest per month on your £500 card, but you've not specified how much you owe on your Barclaycard, nor how much interest they both bear and the APR.

If your £500 card has the highest APR of the two, I'd pay that card off in full, and take the remaining £50 from your bank account if you have it now. Never, ever save when you have debt! The only exception to this would be if the card had a long interest-free period, like an introductory offer on a new card. And then I'd only recommend saving if you had a complete eye on your finances and could pay off the card before it starts charging interest (I thought I'd do that with my interest-free card - 15 months later and I'm paying £20 a month interest on a balance I should have paid off a long time ago!)

Me personally, even if the £500 card has the lowest APR, I'd still pay that one off now, seeing as you have nearly that amount in savings, ready to chuck at it. Then, you only have one card to worry about. Then, throw as much money each month as you can spare. Only then will you ever make a dent in it. That interest every month is beer money you ain't drinking!

straynor88

Thanks guys. Taken your advice on board and as much as I hate to spend my savings on debt, it needs to be done thanks again

lika_86

Personally I'm not sure it is an absolute no-brainer. The problem with spending all your savings on debt is that you could find yourself in a position whereby you need quick access to cash and have no other way to get it than via credit card which then charges a very high interest rate.

Personally I would want to keep something back just as a bit of a buffer in case.

I do fear that sometimes people on this board can be so obsessed with paying back money to their debts that they get blinkered as to everything else like having a bit of a contingency fund.

[Deleted User]

My view is different. Although what the guys here have said is "SPOT ON".

I was told in a different thread that I should be careful to do this and have at least 6 months worth of salary saved.

Now I understand you are paying more with the cc!

But I thought I would put in my opinion and let you know what I was advised, I can see both sides.