All debt at 0% - Do I make extra payments or save it?

weebit

Hi all,

I currently have a total debt of just under £42,000, all on credit cards. Over the past few months, I've been offered numerous balance transfer deals which in short means that every single penny I owe is currently at 0%. The first deal which expires will be on 1st June, so I have about 7-8 months until I need to think about transferring it again.

Therefore I've got a couple of choices:

1. Do I continue to make extra payments to my cards each month and reduce their balance.

2. Do I save the money I would have paid to the cards and pay it all in once lumpsum when the deals expire.

On average, I can afford to pay/save about £700 to £900 extra per month (on top of the minimum payments), so by end of May, I should have paid/saved in the region of £6500(ish).

Now obviously the sensible thing to do would be to pay straight to the cards and reduce the balance, plus this will prevent me from spending the money elsewhere. However I do think about the interest I could earn if I put that money into my current account paying 3%.

Opinion Poll... what would you do?

Dobbibill

Will you be disciplined enough not to spend the savings?

Have you addressed the reason you have the debt in the first place?

Do you have an emergency fund if something happens? If not, I would certainly look at putting one in place.

Will the savings made give you enough to pay off the card that expires in May? You don't say how much is on this card that will expire in May.

There's no need to answer the questions above here but should give you some food for thought.

sourcrates

42k all on 0% is not bad going.

Your credit file must be pretty good in order to obtain all these offers.

If it were me, id get it paid down as quickly as i could, extra payments defiantly.
Creditors are funny !!!!!!s at times, you may not get those rates again.

katy_ann

If it were me I'd personally make extra payments to the cards to get them down and gone quicker, you never known what could happen in 7 months and your situation may be different for whatever reason

FinallyDebtfree2017

From my experience, start chipping away at them now, but keep enough aside for regular payments, car maintenance, tax, etc....

Good luck

binaryuniverse

That's a lot of money to be owing, whether it's at 0% or what not.
Even if you could get more 0% deals, when your current ones run out, you'll probably have balance transfers fees. Which could negate both any savings you have made, and whatever payments you have made on the debt, in that time.

velocity_girl

I don't mean to be rude but I have followed your other thread for some time so my advice to you here is not strictly the most 'moneysaving' but is pragmatic.

Get it paid down ASAP whether it's 0% or not. You started posting here about wanting to reduce your debt 3 years ago and in fact over that period you've increased it by another £10k. I really think you are deluded if you think you have the discipline to save that money to eventually pay off the cards rather than just spending it.

MrsSave

Make sure you have an emergency fund behind you (it will prevent you spending on credit again if something happened). Make sure it is somewhere that is slightly more difficult to access so you won't 'dip into it'. Once you've done that I'd pay extra to the cards straight away.