Do i pay large chunk of 0% bal transfer card off with a rebate payment?

swg81

Hi there,

I have a Halifax 0% bal transfer card, which expires in about 12 months.

When traveling in the USA i incured $2000 USD of medical bills that i paid on credit card, then bal transfered to the 0% card (so not to get charged purchase apr). This amount is sitting in the balance on my Halifax 0%.

The insurance company has just agreed to pay this back. Should i repay this full amount to the Halifax 0% card? Or hold onto it in savings for, say, tax savings (i'm self employed)?

My outstanding Halifax balance is c £8000, so i will need to move the balance to another 0% in 12 months (if i can get another one). I'm currently repaying c £200 a month, just because it's 0% but do have the capacity to pay off more.

I have no other credit card debts / over draft. I only have a hugmoungous outstanding tax bill which i am chipping away at, but interest is so low, i'd rather hold onto the cash as my bill fluctuates yearly.

Advice would be MORE than welcome what to do with this situation. Do i pay off the reimbursement to the 0% card? Or hold onto it in a savings acc?

THANK YOU!

Voyager2002

OK, if you reduce a debt on which you are paying 0% interest, the amount in interest payments that you save is... nothing. If you put the money into a cash mini-ISA paying 3%, then for each year it stays there you collect thirty pounds per thousand deposited. Just make sure that you can withdraw the money when your loan stops being interest-free, since at that point it would make sense to reduce your debt by as much as possible in order to minimise the interest you pay.

swg81

that's a great plan. Thank you for your quick response. My gut was saying not to pay it off, but couldn't find a justification to. But putting the amount + ISA Interest against the debt when the 0% rate ends makes perfect sense.

thanks again.

redpete

Agree with putting it into savings - but not for a future tax bill, save it to pay off this CC balance when you run out of 0% options (or when the BT fee gets close to the amount you will earn on the savings - which is probably when this offer runs out).

Save for future tax from your normal earnings.