Debt Free Dilema


I've been in debt pretty much all my adult life.

It's now down to *only* £1800 on a balance transfer card (0% until August).

With my current "schedule" I'll be able to pay it off November 2013 (unless something exceptional comes up).

I'm also at a push putting a £100 or so away towards my car (insurance/MOT etc) but it's making it very hard to move to a nicer house (we rent a "furnished" house in a not brilliant area of Leeds)

Unfortunately, Halifax (my original "evil" credit card company) have now offered me 0% for 12 months. I've got a payrise/bonus due in next few months so would make a few overpayments over the next 12 months and easily pay it off by end of 12 months.

So, what would you do? Keep paying £200+ a month to pay off the credit card and try to put £100 towards car or should I take the Halifax's offer and have 12 months of paying off the debt (probably pay £125 a month) and put extra (£200+) into my ISA.

If I switched to First Direct I'd be able to get 3% on an ISA and so the decision is now do I:

a: Pay it all off ASAP - Stick with existing card, just keep putting off moving house/buying Mrs Sam_In_Leeds a ring (it's been 5 years)/staying in same grotty rented house but at a push being debt free in November, try put some money away for car etc and resort to credit card for car emergencies etc and then start building up "buffer" savings/savings for deposit on a house etc.

b: Switch to Halifax and take an extra 6 months to being debt free but possibly be able to save more money into my ISA than I'd be saving atm and build up a decent buffer?

I think the 3% balance transfer fee is roughly equivalent (if slightly more) than I'd pay in interest between Aug-Nov after balance transfer offer ends on existing card and debt free date.

If it makes any difference, I'm 29 (big 3-0 in November) and approximately £500 in savings, a permanent full time job with a bi-annual bonus and a 10 year old bloody car!

Head says go with Halifax's offer but heart says I've been in debt pretty much since age 20 (student sodding overdraft) and want to be clear by time I'm 30.

Sorry for the essay! Part of me thinks not long to go part of me thinks stretch it out.
I spent 90% of my money on women, drink and fast cars. The rest I wasted. ...



  • elantan
    elantan Forumite Posts: 21,018
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Your calling Halifax " evil" and yet your willing to take more money from them ?

    I would pay your debt off and save, sometimes it due to not waiting and saving that people find themselves in a debt cycle, you have a great opportunity to break this cycle for good ... Break it, learn from it and get yourself into a better financial position,

    Good luck whatever you decide
  • Katzen
    Katzen Forumite Posts: 535
    Uniform Washer
    Agree with the above poster. Get that debt cleared ASAP! As you already have £500 in savings I'd even be tempted to suggest you stop saving, whack everything off the card to clear it quicker, then 'pay back' your savings once it's gone. Although you would earn 3% in an ISA your saving small sums so the actual value of that won't feel like much actual cold, hard cash. The mental benefit of being debt free would be much greater than making an extra £10 on your savings
    Mortgage Outstanding Nov '16 £142,772.75
    Mortgage Additional OPs 2017 Target £4522.80/ Actual £865.00
    GC Feb 0/£200
  • Herbalus
    Herbalus Forumite Posts: 2,634
    Tenth Anniversary 1,000 Posts Name Dropper
    The ISA from First Direct is only 3% on balances over £40,000. If you have this amount, there is no reason for you to keep that sort of money when you have debts on credit cards.

    If you only have £500 savings then the rate will be a paltry 0.5% (and stays there up to £5000). Not sure if you want to take that into consideration.
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