0% CC or Mortgage?!

Pepperoni

We have around £6000 on a 0% (for 30 months) credit card. Paying the minimum amount each month that will ensure it is cleared during the 0% period.

Our mortgage is 3% and we can overpay by 10% of the total each year.

Would you;

A) Carry on paying minimum payments on credit card and put all other disposable income into the mortgage overpayments?

Clear CC, then tackle mortgage?

I think I'm B... but I think H will be A as the CC is 0%. Just wondered what outsiders thought!

Thanks.

edinburgher

Only paying the minimum on the CC leaves yourself open to financial difficulties if some unfortunate turn of events (job loss etc.) rears its ugly head. It would be very bad luck indeed, but defaulting on a CC could potentially mean that you wouldn't be able to remortgage in future, getting stuck on an existing deal etc. etc.

If I were you, I'd pay the minimum to the CC, but save enough each month to completely clear it when the 30 months is up. The savings interest from this pot can be used to clear the CC faster (ideally), or for OPs.

Don't overpay your mortgage if you have existing debts and no money with which to pay them off

Pepperoni

Thank-You! What you say makes perfect sense and has just confirmed what I already thought was best for me.

I'll save the amount needed to clear the CC in full at any time should we need too. Otherwise use that to pay the monthly payments and let it sit in our bank account earning the interest.

Then save for mortgage overpayments!