£6k on cards - what to do in future

Tyrone_Black

Hi all,

I've just taken some control of long-standing credit card debts, reduced my bills and worked hard enough to get a promotion, so what's happening at the moment is:

£6k owed
- £1.7k 0% until April 2017 on one card
- £4.3k 0% until July 2017 on another
- minimum payment each month (1%)

£2k in current account - investigating best ISA option
- £300 per month being moved into First Direct regular saver - will be able to take £3,700 out of this in June 2016.

I should now be able to save more than £300 per month in the new job and I'm hopeful of a £1k PPI refund.

Basically I should easily have enough to pay the debt before I have to pay any interest again and not have to make massive lifestyle changes because of the extra salary and changes I made to my outgoings. My question is: why pay it? I'm working on the assumption that I will pay the £1.7k in April 2017. Assuming I have enough in savings to cover it, what do I have to gain by paying the £4.3k as opposed to just shifting it at 0% again?

HappyMJ

Tyrone_Black wrote: »

Hi all,

I've just taken some control of long-standing credit card debts, reduced my bills and worked hard enough to get a promotion, so what's happening at the moment is:

£6k owed
- £1.7k 0% until April 2017 on one card
- £4.3k 0% until July 2017 on another
- minimum payment each month (1%)

£2k in current account - investigating best ISA option
- £300 per month being moved into First Direct regular saver - will be able to take £3,700 out of this in June 2016.

I should now be able to save more than £300 per month in the new job and I'm hopeful of a £1k PPI refund.

Basically I should easily have enough to pay the debt before I have to pay any interest again and not have to make massive lifestyle changes because of the extra salary and changes I made to my outgoings. My question is: why pay it? I'm working on the assumption that I will pay the £1.7k in April 2017. Assuming I have enough in savings to cover it, what do I have to gain by paying the £4.3k as opposed to just shifting it at 0% again?

As long as you can shift debt for free then keep the savings. You'll make more in interest than you pay out.

Tyrone_Black

So it shouldn't be doing any damage?

My main concern is if I get the right to buy in the next couple of years. I'm either going to have a manageable credit card debt and decent amount in savings for a deposit, or no credit card debt and little for a deposit. Which is better? (I know there's no definitive answer)

ellesbellesxxx

I would be careful having cc debt when applying for a mortgage... I was stoozing and had 4500 on a card. We then decided to put an offer in on a house so I paid off 2500... We were not allowed a 25 year mortgage, instead were only given 30 year mortgage.... Not making that mistake again! Have a little on a card at the moment but paying it off by end of year and having nothing on card for a couple of years now.

Tyrone_Black

I think maybe I need to find a sensible place in the middle. £4k would be at a lot more worrying to a bank than £1.5k, I'd guess.

rockm87

I agree having debt when applying for a mortgage isnt a good idea. Obviously it depends on the provider.

You have to be careful though, you dont know what might happen in the future, I'd keep an emergency fund, and just get rid of the debt. just incase anything happens where you cant pay if off before the interest kicks in.

Tyrone_Black

Oh yeah, that's part of the motivation for prioritising keeping some savings over paying it all off. That gives me some flexibility if I were to lose my job or whatever.

determined_new_ms

I've been stoozing for a couple of years and we got our mortgage no problem. When the broker did the first application (and the remortgage recently) I explained I had a credit card balance but had that amount of money in a savings account. Didn't cause any difficulties

Tyrone_Black

Cool. Thanks for advice. It was horrible facing up to the amount I owe but I think I'm on a good footing. I just wish I'd stopped being such an idiot earlier.

xxxJOJOxxx

Tyrone_Black wrote: »

Cool. Thanks for advice. It was horrible facing up to the amount I owe but I think I'm on a good footing. I just wish I'd stopped being such an idiot earlier.

Don't we all :-D

ViolaLass

ellesbellesxxx wrote: »

We were not allowed a 25 year mortgage, instead were only given 30 year mortgage....

Is that such a big deal? Just overpay as if it were a 25-year mortgage, subject to penalties, and problem solved.