Keep shares or sell them to pay off credit card

kinamod

So I have about £6k (7.25k) limit of CCard debt at 18% now, didn't quite get round to paying it off in time for the 0%. My credit (I think due to this) is not good enough to get another 0% card.

Now, I have $16k (usd is intended) in shares. They're doing well, and I'm confident they'll keep going up, (they have been for the last two years). Should I just sell what I need to pay off the debt? Or should I just keep chipping away at it? Alternatively, I could sell enough to pay half the debt? I guess that'd get my credit util down, and thus improve my credit report.

Any thoughts are more than welcome.

I have a few cards, but I don't use the other two as they get no cashback and this one does. It's been at a balance of ~6k for a while, so essentially I'm spending at the rate at which I'm paying it off... (Not ideal)

utroi85

Any hint on who the shares are in - how much was invested what's your current profit margin ?

northerner999

It would take a mighty return on your shares to be more than 18 per cent, which is what it would need to be to be worthwhile.

Continuing spending on a card where you are being charged 18 per cent is not smart. Spend on others, pay off in full, because every penny you spend is likely being charged at 18 per cent which will render your cashback meaningless. You are a nice little earner for them and in part it is because of the way you use the card, which plays into their hands.

If you can clear the debt by other means do that, it's whether you can or not. Sell half and half? We can't answer these because it is personal choice, but not clearing the debt leaves you struggling, and please stop using that card!

enthusiasticsaver

I seriously doubt your shares are doing better than 18% per annum so if that is the rate you are paying on your credit card you should sell them and pay it off. It is never worth having savings if you have debt unless the return on your investment is better than the rate you are charged on your debts. You are also better off not using credit if you are not actually reducing the balance. You must be paying more than £1k per annum in interest on that.


I also wonder why you cannot get a credit card with a better rate if you just have that one card with a balance of £6k on it. Do you have defaults?

kinamod

So I think right now the shares are at 14% profit so far? So not quite the 18, so I see the logic. It's basically a company share scheme, so I guess i should keep buying at the 15% discount, and then just sell them straight away and use the cash for my debt (technically that gives me a 17.6% return by default right?). And yes, I know using it is dumb. And the other two cards are credit builder cards, so the interest on them is like 39 on one and 35 on the other. Hence me not using them.
This one only started charging again in October, so that's why I haven't had the full brunt of the interest yet.

No defaults, credit is spotless besides this according to credit expert (experian) and noddle (call credit?). I don't remember anything on equifax, but my free trial for that has run out.
The shares are on OpenText btw.

Thanks for the replies, I feel like its stuff I should know, I just need to hear it from someone else.

sourcrates

It's a non question, pay off your debt, you will still have some profit left, unless you enjoy been in debt ?
Choice is yours !!

northerner999

You are throwing money away right now because you are blinded by what you could "earn".

Do everything you can to avoid spending on that credit card. It's no good saying you have only just started paying interest, as EVERYTHING you spend on it is charging you 18 per cent. With proper budget you can use a debit card linked to a current account or cash instead and not pay almost one fifth to the credit card company on top of everything you spend. If you put £50 of petrol in your car why are you giving almost an extra tenner to the credit card firm? All your shares are doing is paying part of your charges, leaving you out of pocket and paying for the privilege.

Playing_with_Fire_2

I would sell the shares to pay off the 18% card, but this is a personal choice.

If I've understood your posts, you also have credit builder cards with ~35% APR that have a zero balance on them? You should stop putting necessary monthly spending on the 18% card, put it on either of the credit builder cards and pay this off in full each month (you then won't pay any interest). Nothing should go on any card that isn't necessary spending until the balance is cleared on all cards. You are currently paying interest on the bit of the balance that you are clearing, and this will cost you, the cashback is tiny compared to the interest you are paying.

fruitisbad

if they are company shares I assume you can buy more?

Sell shares to pay off the debt, once that's done start buying more shares with the money you used to throw at the debt to build your share level back up.

Sanctioned_Parts_List

So your £6k at 18% is probably costing you £150 - £200 to service the minimum repayments.

Investing that same £150 per month, even without the company discount, would see you break even in about 3.5 years and have grown to close to £9k* after 5 years. 5 years is about what it'd take you to pay the CC off at £150/month.

So selling shares to pay debt, then using the money saved to buy more shares is profitable.

* I assumed 2.5% average interest pa as a fudge to avoid calculating monthly interest for a target 6%.

Lucyxx

I am not clever enough to do all the maths right now, but I would think selling enough shares to pay off your credit card would feel like a weight off your shoulders/very freeing knowing that £6k balance was gone. I think it would also motivate me to keep on top of not letting it accrue again, and you could even start to build your shares back up with money you are not throwing at the credit card (if possible)