Pay off credit card with equal savings?

Steven001

Hello,

I have a quick question: I have a credit card with a balance of approximately £2600 which is currently 0% interest until the end of this month. I also have a savings account which has roughly £3250 in it, earning approximately 3% interest.

Now, I'm in a situation where I either take out another credit card with 0% interest on balance transfers for 12-20 months (there are a few available) and continue to pay off my credit card at £250-£300 per month... Or pay off the remaining credit card balance with my savings and try to keep the credit card for emergencies only.

Would would you do?

londonTiger

although your not making any money on savings (or very little). I would keep the savings where they are and get another 0% purchase or balance transfer card. and move the money there.

Having some savings is a useful safeynet to have.

I think the 0% balance transfers will have a longer interest free term than 0% purchase. But do shop around and see which gives you the best deal.

n.b. balance transfers will have between 2.5% and 3% fee. which is a years interest from savings. So bear that in mind.

aleph_0

If you can get one of the best balance transfer cards:
http://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards
In particular, Lloyds offering 21 months for 1.5% fee, and Nationwide 20 months, 1.55% fee, then there is a little profit to be made, so this might be a good plan. And as londonTiger says, it's a useful safety net.

Also worth looking at where you're putting your day-to-day spending, and whether you can move that to a new card with a long 0% rate and/or a good cashback rate.

YorkshireBoy

This calculator will tell you if a BT is 'profitable' in pure cash terms.

However, even if it's not profitable, you may feel more 'secure' knowing you have access to savings equivalent to 2-3 months net income should the worst happen!