0% c/card or Savings??

charlieg81

I currently have a 0% credit card but also have a few hundred pounds of savings. Would you recommend keeping the savings or using them to pay off the credit card?
Many thanks

YorkshireBoy

Why would you want to repay something you don't have to...yet? Especially if it's going to leave you short.

charlieg81

I'm wanting to get rid of the debt and so wondered whether it would be best. I'm also trying to save up for work done on my house, so it's all a juggling act

Scarpacci

It depends how much you trust yourself not to "ignore" this debt and spend more than you can afford before it becomes repayable/ the 0% expires. So do you think it's possible you might spend your savings and spend the money you're getting in, while this debt only gradually declines leaving you with a balance when the 0% expires? Or do you think you will be able to pay this off month by month during the 0%, maintain your savings and then pay it off when the 0% expires?

In purely financial terms, it makes great sense to borrow at 0% and save money at 3/4/5% (presuming it's in best buy current accounts). For some people though, they might recognise the temptation to overspend is too much for them and so it's just not worth having credit cards. It depends on your nature. For what it's worth, I wouldn't think it wise to go without any savings - so paying off the CC while it's at 0% makes sense.

charlieg81

I've been paying back my minimum payment plus £100 extra most months, but if I have an expensive month then I can only pay off the minimum payment. It has stopped my ability to save for my home improvements but is slowly chipping away at the debt

billchecker1

Keep it in a high interest account (TSB, Nationwide offer 5%). Pay back the monthly bill from that.


Then just before the 0% period on the card ends, pay off the full balance.


Close the card and the interest is yours for free.


Its called stoozing.

ricky_v

billchecker1 wrote: »

Keep it in a high interest account (TSB, Nationwide offer 5%). Pay back the monthly bill from that.


Then just before the 0% period on the card ends, pay off the full balance.


Close the card and the interest is yours for free.


Its called stoozing.

Indeed, if you're not daft with credit cards and can control your spending then you'd be daft to pay off a debt costing you nothing. As well as the interest gains, inflation also erodes the value of the debt slightly.

planteria

good advice above.
you just need to be disciplined and 'save' the money to repay the debt when the 0% deal comes to an end.