Pay or save?

kerri_gt

Hi, I finally have one last card to pay off that is on a long 0% rate now. I was planning to keep plugging away at this paying over the min payment each month where possible. However, so long as I keep up the min payment each month, would I be better off paying what I would have 'overpaid' into an ISA for a year, earn a little interest at least on it, and then pay off a chunk when the ISA matures? Ie before the 0% period ends?

It is unlikely that I would be able to pay off my card, and use up m ISA allowance on top of that, so I'm not restricting that in any way. Just seems to make sense to me to earn a big of additional money if I can if the card balance is not accruing interest.

grumbler

kerri_gt wrote: »

...so long as I keep up the min payment each month, would I be better off paying what I would have 'overpaid' into an ISA for a year, earn a little interest at least on it, and then pay off a chunk when the ISA matures? Ie before the 0% period ends?

It's obvious that it's better to keep money in some savings account, but for short-term savings there are better accounts than ISAs nowadays, and I dont' quite understand what you mean by saying "when the ISA matures".

• Top Savings Accounts
• Regular Savings

Anthorn

It can be said that some ISAs mature in the sense that at the end of the tax year the balance is moved to a different account.

Re. OP. It's relative to how much in savings you already have. If you already have what you regard as enough to fall back on in an emergency it makes sense to chip away at the CC balance since the 0% period is finite. Otherwise put some into savings.

grumbler

What 'different account'? A different ISA?

planteria

kerri_gt wrote: »

However, so long as I keep up the min payment each month, would I be better off paying what I would have 'overpaid' into an ISA for a year, earn a little interest at least on it, and then pay off a chunk when the ISA matures? Ie before the 0% period ends?.

yes. just make sure you have the discipline to save enough to clear the balance by the time the 0% deal ends.

if it is 12months+ at 0% still, perhaps set up a Regular Saver which will more than cover it...then you pay it off, make some interest, and have some money left over for a rainy day.

kerri_gt

Anthorn wrote: »

It can be said that some ISAs mature in the sense that at the end of the tax year the balance is moved to a different account.

Re. OP. It's relative to how much in savings you already have. If you already have what you regard as enough to fall back on in an emergency it makes sense to chip away at the CC balance since the 0% period is finite. Otherwise put some into savings.

grumbler wrote: »

What 'different account'? A different ISA?

Thanks Anthorn, I did mean at the end of the tax year / promotional ISA rate that all easy access ones seem to have these days.

The 0% period is quite a lengthy one! longer than the remainder of this tax year at any rate. Generally I'm quite good with money (the cc was not accrued through my overspending ) so I trust myself to make the regular savings and then ensure the amount is paid before the 0% ends. It's not my regular spending card (that one has cashback) and I don't even know the pin, it's tucked away so little chance of using it at all.

Right, off to look at savings and interest rates.....