Am I crazy?

KevF_3

My wife and for really stupid reasons probably got into a lot of debt. We turned things a little but still have a sizable amount left, about £11,000. The good part is we now have a little more than £11,000 in a couple of ISA's right now.

The debt is on 0% deals that are expiring in September 2013, a short time after the 1 year bonus ISA rate expires.

I think the sensible thing to do would be to use the ISA money to clear the credit cards and for the 1st time in about 20 years the only debt we will have will be the mortgage but.......

.......I think we could earn more money from the interest than the balance transfer fee would cost. Plus I will be chipping away at the debt each month so by the time the new balance transfer expires the debt will be quite a bit less than £11,000.

So am I crazy?

Masomnia

I'd leave things as they are and see how they look when the 0% deals come to an end. As long as it is costing you nothing you may as well leave it.

ccbrowning

Only pay off the debt if you have to pay interest - but be careful that you do pay it off in its entirety before the 0% rate is gone. You are at least earning interest on the money at the moment...

cos_2

Agree with Masomnia.

It may workout as pennies at the end of the day, but there's always that braw wee feeling of smugness that you've beaten the big money companies if your interest rate on savings is 3.1% and the credit card is 3%!

Hang on till nearer the time and make the decision then.

As to the question, yes, you probably are

Macca83_2

Oh definitely. Keep the money in savings, clear as much of the credit cards as is humanly possible and then right before the 0% ends, get the credit cards paid off. But only do it if you definitely won't put any additional spends on the cards

jimjames

Balance transfer fee is normally 3% or so.

If that is to Sept then you need an ISA that pays more than 3% in 9 months to make it worthwhile not paying off the credit cards. Remember to calculate the APR for the transfer fee you need to take account of the number of months so its not a straight 3% vs ISA rate, it will be 12/9 x 3%

If you have that then keep the debt, if not then pay it off

KevF_3

thanks guys.

I'll wait until next September and see what is around.

At the moment there are offers of 1% transfer fees for 12 months. that compared to earning 3% APR on my savings would be worth hanging onto I think.

the savings were inherited if you are wondering why I had so much savings and so much debt by the way.

I have never been able to save either but paying the minimum payment will be like putting £200 into the bank each month. as long as I don't touch the ISA money.

sabretoothtigger

Some people might not be able to stop themselves spending the money. In which case it is best to pay off the debt now.

If you got the will to realise its not my money till the debt is all gone then carry on with your plan

A step even further would be to reduce a higher rate mortgage by using the savings. The risk is that the cc debt is shorter term, if rates rise all these offers will evaporate

badger09

Not much to add, except that when the bonus rates on your ISAs ends, just organise a switch to the best (albeit cr*p) instant access ISA around at the time.

Better rates could be available on Fixed Rate/Fixed Term ISAs, but if you go for one of them, you won't be able to access your ISA savings without penalty when you need them to pay off the credit cards.