Overpay on mortgage or clear credit card first?

Hi,
Ive been trying to sort out my finances this week and now have all of my debt on a 0% credit card until May 2017. Ive also just switched my mortgage deal to a 2 year fixed at 2.53%.

Anyway, my original plan was to continue paying the mortgage as normal, and pay £300 a month off my credit card a month to have it cleared by the end of the 0%, then after that start to make overpayments on my mortgage.

Would it not make more sense for me to pay the minimum (or slightly more) off my credit card whilst its on 0% and put the rest say £200 as a monthly mortgage overpayment? It seems obvious now im typing it, as the best way to clear debt is to pay the highest interest debts first isnt it?

I'm just having second thoughts because although my mortgage debt is obviously much higher than my Barclaycard debt....dragging the credit card debt out longer than necessary just doesn't sit right with me, as my aim has always been to clear them and get rid.

Any advice?

Replies

  • A_Frayed_KnotA_Frayed_Knot Forumite
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    Hi and welcome

    Have you any savings ? If not then I would keep paying the minimum on the credit card and pay say £150.00 to o/p your mortgage and £150.00 into a savings account with a good interest rate, so when you go to pay your c/c you have a little more in the pot.


    That is just an example you would need to work out the details yourself, so you reach your total credit card figure by the due date. The c/c is not costing you anything at the moment, so can use your ££ wisely and get interest on it for a while anyway.
    Always have 00.00 at the end of your mortgage and one day it will all be 0's :dance:
    MF[STRIKE] March 2030[/STRIKE] Yes that does say 2030 :eek: Mortgage Free 21.12.18 _party_
    Now a Part Timer from 27.10.19
  • KhrisjunKhrisjun Forumite
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    Hi,

    I would personally be saving any potential payments - If you can afford £300 per month then put it into 5/6% interest current account/regular savers. Then when the credit card 0% is up, either transfer to another card on 0% or pay off with the amount you have saved.

    Your mortgage rate is good, so if you can get interest on savings greater than that, its better to save.
  • Thanks for your replies, a savings account hadnt even crossed my mind to be honest as I always think I shouldnt be saving whilst I have to be paying off but what you are both saying does make sense, something to look into now I think!

    Thanks again :beer:
  • lulabelle1lulabelle1 Forumite
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    You can save a few pounds here and there by either saving or overpaying the mortgage instead... but I'd personally get rid of the Credit Card debt asap as I just don't like owing money on a CC.

    Also, I'm not sure how strict I'd be with the savings account and would perhaps be tempted to shift the 0% CC again at the end of the term (after using the saved money for a nice holiday or home improvements!) and find myself in a position where I'd not achieved anything in regards to reducing the CC debt.

    No idea if that makes sense!
  • edinburgheredinburgher Forumite
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    I agree with Lula, the phrase from the OP 'all of my debt' sounds quite telling.

    I carry CC debts, but only because the money is earning more elsewhere and the 'debts' were specifically taken out to invest. If I had debts from purchases, I'd be paying it off pronto as it suggests that something is out of kilter with your earning vs. spending.
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