If you are debt free now....what have you kept for emergencies?

FIRSTTIMER

Hi,


I was wondering what's best to keep open for emergencies and what does everyone else have?
Have you closed down all cards? Have you kept an overdraft?


Lastly, if you had a credit card at 0% left for 9 months but you have a £2k in savings, would you just clear it and be totally debt free based on current rubbish interest rates or keep it there until the end...

sourcrates

For the first time in my adult life, i have no debt.

I have no mortgage, no loans, no credit cards, and no overdraught.

I do have a catalogue account, which i keep open for clothes shopping, as i live in the middle of no where, so just makes life easier for me.

Apart from that, i live within my means, i am currently saving my emergency fund, (never been a good saver but hey) i can afford to put aside around £500 a month, but as someone who has neglected there pension for years, i need to address that too.

FIRSTTIMER

wow ok...well done you!

datlex

My debts were loans. I use credit cards as a means of payment (not a source of funds) and pay them off IN FULL. For emergencies, I have money put aside.

binaryuniverse

FIRSTTIMER wrote: »

Lastly, if you had a credit card at 0% left for 9 months but you have a £2k in savings, would you just clear it and be totally debt free based on current rubbish interest rates or keep it there until the end...

You've failed to mention what the balance is on the 0% card. We'll assume it's £2000.
Either way. If I've got 9 months at 0%, and the money available to pay it off then that's 9 months I could be gaining interest on the savings (some £45 if at 3% £75 at 5%).

I would keep the cards that offer me rewards for spending. As I would use that to pay for everything, then pay it off when the statement comes in. I would also keep cards that have a large limit, for that just-in-case emergency.
I fully intend to keep my overdraft. I went in to it once, last year, when I was unemployed. I was only overdrawn for a few weeks. Then I got paid from my new job. So it was very useful to have there. But that was the only time since about Aug 2015 I entered the red in my bank account. Now I've got a nice large cushion.

FIRSTTIMER

Cheers - yeh I mean reduce my saving balance to 33k and pay my 2k credit card off which is 0% until sept

determined_new_ms

as soon as I had saved the equivalent of my od I closed all od's - at that point I had 2 of about 1500 but I hadn't been in them for a year.

I have cash back credit cards which I use for day to day spending to accrue the cashback. We now have £1000 in our emergency fund but in reality if SHTF all savings become emergency (I was out of work for a while and despite having various "pots" of savings, when I had no income I slashed my outgoings and lived off of my savings)

I guess that's for you to say re the savings. Once we got debt free originally I took out a 0% card on purchases and spent on it for a couple of months and stored the money I would have spent in a savings account. This was in 2010 since then I've tarted the balance and it will be cleared when this 0% runs out. I've been getting a steady £11-18 from it a month (reduced now as the interest reduced/fees increased on accounts) If you can be disciplined why not earn interest on it?

kirstybum

I've kept my overdraft of £750 just in case but this is more for keeping some available credit on my record when I come to apply for a mortgage at the end of the year. (I don't actually use it)
If not I'd just keep an emergency fund.

ab_saver

I'm working on an emergency fund, and have kept my cc open for section 75 protection on purchases. I electively had the limit on my overdraft reduced, and changed account type to one that paid in credit interest - but the first £100 of the overdraft would be interest and fee free. Thus far I haven't had to use much, but I like having the security of having a small amount of available credit (my parents live abroad and it means I'd be able to afford to fly to them in an emergency).

I am planning to get a card that gives cash back or points - I have always paid in full every month so I could benefit from some of the bonuses available.

Windofchange

I am fast approaching the holy grail of debt freeness (See signature). For me I would pay the debt as that is now my mindset. I want to be debt free. The Virgin card I have will be 0% until 2019, so I could just park it, but I want it gone. It is a psychological thing. This is the year I break it.

Once it is gone, I will keep open three of my cards totalling about £30k in credit. This will serve as my rainy day fund whilst I then focus on building savings. Should anything happen in the interim I can transfer off a few grand or whatever to cover it.

My goal for 2018 is likely to be along the lines of saving £10k. Once I have that I may close one or two of the accounts. Problem is that shutting your lines of credit can actually do more harm than good to your credit score. Maybe that is a good thing. Never again either way!

chelseablue

I currently have £11,000 of savings as an emergency fund, its there in case either of us lot our jobs.

I also have a credit card with £0 balance and a £5,000 limit that I could use for an emergency.

When our son goes to school our outgoings will drastically reduce as we wont be paying out £860 a month on nursery fees, so I wont need so much emergency cash.
So I'm debating using some of the savings to overpay the mortgage and keep about £8,000 in the bank