It it time to save or still pay off debt?

cococoladebt

Not sure where this article should fit but I think this is the best place for it.

I've slashed my debts down to just the following now:

Nationwide CC - 2,800 - 0% until October 2012.
RBS Overdraft 1,800 - 0% for what seems like a lifelong.

I have a number of options I am thinking of, I can either (1) start saving and don't pay any further debts off until next year, move the credit card to another 0% card in October (2) pay down the overdraft and then pay off Nationwide this year and be debt free.

The credit card is costing me just over £32 a month. £4,600 sounds like a lot of debt, so may be I could just reduce the debt to say £3,500 and forget about paying this off until next year and concentrate on saving.

Your thoughts are welcome.

mr_fishbulb

cococoladebt wrote: »

Nationwide CC - 2,800 - 0% until October 2012.
....
The credit card is costing me just over £32 a month.

How is 0% costing you £32 a month?

You wouldn't get £32 a month interest on £2800 in a savings account. Pay that off.

cococoladebt

Sorry it was a long day yesterday.

The cost I was referring to was actually the minimum payment, it's not a cost because interest is 0%.

DiggerUK

cococoladebt wrote: »

......The cost I was referring to was actually the minimum payment.......

Why do I have the feeling, that the reason it has taken so long to get your debts down to £4600, is because you only ever paid the minimum.
Stop fannying around, there is a reason they let you pay the minimum.
Debts don't go walkies with debt fairies in the middle of the night, you have to pay them off.

..._

psychic_teabag

My understanding that transferring a debt to an interest-free card still incurs a cost (3% or something). So you should perhaps try to pay that off (or reduce it) before you have to do that. No point earning 3% on £2800 for a year if you then have to pay 3% to transfer it in 6 months.

Well, you could get 3.5% instant-access in an ISA, which seems more, but you don't have the £2800 now : even if you saved it up over the year, you'd only get the interest on the average balance of £1400 which wouldn't cover it.

psychic_teabag

DiggerUK wrote: »

Why do I have the feeling, that the reason it has taken so long to get your debts down to £4600, is because you only ever paid the minimum.
Stop fannying around, there is a reason they let you pay the minimum.

Even if it's 0% ? Once the transfer charge is paid, isn't it better to pay the minimum. With the caveat that you save the rest of the payments into a savings account so you can pay off the debt when the 0% rate expires, of course.