0% Credit Card vs Savings

Sparktheman

Hi, I hope someone can help me out here.
I have a 0% credit card until March 2019 with a balance of £8500, and regular payments of £80 ish so it is slowly decreasing.

However, as a result of a house sale and bereavement I have £100k in a savings account.

So, do I leave the credit card just to tick along until the interest kicks in or do I use some savings and pay it off now?

In theory, The savings are earning interest, As the card is 0% it doesn't cost me (other than the minimum monthly) and paying it off would mean that £8500 of the savings would stop earning (paltry) interest.

I believe I'm at the right site, but I am well confused.com :doh:

Any advice would be good right now.
Thanks

T-G-C

I can't give this as professional or experienced advice, as I have neither, but if the money isn't being touched or planned to be touched, and it's simply brewing interest, then it wouldn't hurt to remain with your current plan and pay it off nearer the expiry date, thereby earning interest on top so it's win win. As I said, I can't give this as the 'correct' advice but it certainly sounds like a perfectly good plan as long as you can trust yourself to keep it in there.

Ebe_Scrooge

Yep, the above advice is spot on. Pay the minimum each month to the card ( make sure you do this, otherwise you'll lose the 0% promotional rate ). Make sure you make a note in your calendar / phone / whatever as to when the promotional rate expires. Pay off the card in full just before the promotion expires.

Some people argue that only paying the minimum on a card reflects badly on your credit history. For an ordinary card this is true, but your credit file will show a "promotional flag" on your card account, so it's not an issue. Paying only the minimum on a 0% card - and making sure you have the funds to pay it off when the promotion ends - is what any sensible money-saver would do.

PinkPig

You're right that financially you make some extra interest by leaving the £8500 in your savings account. Interest rates are low, but £8500 is a sizeable amount so it's not pointless.

In practice the advantages of paying off the credit card are:

• simplification - no need to remember to pay off the £8500 in time. If you forgot to pay it all off in time then there would be interest charges, or if you missed a payment that would be bad for your credit rating
• feel-good from paying off your debt
• it probably doesn't apply to you, but if you have a history of getting into debt then you might find it easier to stay out of debt in the future by paying it all off now and setting a clear line in the sand. Or you might not - do what you think works best for you.

Either way you should take the opportunity to think about how you want to save (or invest) the £100k. The difference in interest between the best/worst savings account could be much more than the extra from the £8500.

Sparktheman

Thank you everyone.

I plan on leaving the Credit Card as it is until the promo runs out.

In the meantime, I will be looking for the best way to save/invest my £100k