Pay off Interest Free Debts in Full or save money and then pay?

mummymoments

Hi all,

I am really proud of OH and my achievements at clearing off our debts thanks to all of the support and advice received from this forum. At our worst moment between us we owed over £52k approx 8 months ago but have now managed to clear off loads :j and are just left with 3 x 0% interest debts and 1 x A&L loan at present (approx £1,500 outstanding which ends in March 07) which all together total about £12,700).

Debts:-

HSBC Credit Card - £1,200 - 0% until April 08
Loan from parents - £2,000 - 0% (see comments below)
Course repayment to husbands former employers - £8,000 - 0% - currently paying £200 pm
A&L Loan - £1,500 outstanding - 7.9% - ends April 08 - see comments below

So heres my dilema - we are currently paying the minimum off all these 0% loans (apart from the £2k loan from my parents which they have said we can have as a gift - although I don't really want to take this much from them they are adamant that as we have just had another baby they want us to have it!) and now have a bit of spare cash each month to do with as we please (approx £250 pm).

Now I know that we are still in debt but is it worth us either saving this amount in a good high rate interest account and just keep paying minimum payments required on 0% loans (the A&L loan has clauses that even if we pay off the amount outstanding early we still pay exactly the same amount of interest as if we keep it for the full term so don't really see any point in paying this off in one go - unless you lovely lot think otherwise?) or paying an additional amount on our mortgage each month to help reduce the term and save loads of interest in the long run rather than put this money to pay off our remaining debts?

I have managed to save £1k already by selling loads of stuff on Ebay and finally getting a £500 refund from Avon so this could be used to pay off HSBC CC when 0% rate runs out if we go down the mortgage overpayment route.

Sorry for long post and I hope I make sense.

immoral_angeluk

personally I would save the money in a high interest account until the 0% term was over.

angelavdavis

Personally, I would stash the cash away in a high interest account and pay the minimum but ensure the payment goes onto the card in plenty of time so you don't attract any interest.

I have been doing this with my credit card and it will be paid off in June when my 0% deal ends - I have managed to get nearly £8.00 interest from putting the balance in an A&L high interest account.