A wise move??

Tommymax81

As part of my quest to become debt free I have been looking closely at our outgoings. Our car insurance was recently due for renewal (multicar policy for 2 cars). I managed to get a good deal on this but there was an APR on the monthly payment option. Paying the full £700 was not an option but I was loathe to pay interest.

I paid the full amount on a credit card that has 0% for 12mnths and I have set up a DD to pay this off monthly over the 12 month period. This means I don't pay any interest but still get to pay it monthly.

I know this makes sense financially but it feels strange to be adding £700 to our CC debt when we are supposed to be reducing it. I guess that we can use the money we will save on APR to chuck at our other debts!!!

So my question.... Is it ok to use 0% for such payments if it means that you can save money elsewhere or is it best to avoid any additional CC debt??????:)

19lottie82

Monthly payments for the car insurance is still debt, and with a more expensive APR than the card, so of course it makes sense to use the Cc AS LONG as you pay it off in the same time period as the insurance installments

asparagus1968

i think this is "using credit wisely" well done!
just make sure you pay off in the 12 months and you'll be fine.


.........but what will you do with the card after that???

orcocan

as long as you're disciplined and don't slip into old habits, it's a very wise move

katy_ann

If you can definatly pay it off within the time scale then yes a good idea

Tommymax81

Thanks for the replies,

I definitely won't be using the card when it is paid off. I have already cut it up!!!

InsertWittyName

I've just done exactly the same, putting the renewal onto a 0% credit card.

I had the money saved up in full - but paid this towards my loan (at 8.8% APR) instead!

Makes sense to me

Tommymax81

The only downside is that it shows on my credit report whereas my previous monthly insurance payments didn't.

joedenise

You also need to be making arrangements to save enough money over the next 12 months so you can pay off the insurance in a lump sum, unless you are lucky enough to get another 0% card but that, of course, can't be guaranteed.

Denise

Tommymax81

I think it is unlikely that I will be able to save next years premium but at least I have saved money this year and hopefully I will be able to secure a similar 0% deal next year.

DVardysShadow

Another one of these interest rate conundrums is Road Fund Licence.

Suppose you have a choice of an annual licence at £250 or a 6 monthly at £137.50. If you look at buying a 6 month disc at £137.50, for an extra £112.50, you can get the whole year. So just by not buying a full year, you have increased the cost by 22%. And because you have only delayed paying for 6 months, the APR is actually more like 45%.

It makes sense to put that extra £112.50 on a credit card at any rate less than 45% APR