Use credit card to preserve savings?? 28 March 2018 at 11:52PM edited 30 November -1 at 1:00AM in Credit Cards 5 replies 846 views

andy_d12003

My wife is on maternity leave and her pay is rapidly heading towards 0.

We have £5k in savings to get us through this period.

However I have recently taken out a credit card that has 0% interest in it for 27 months.

I’m thinking I might be better off using the credit card and when my wife goes back to work in November, we could probably pay it off within 6 months and still have the savings.

Does this sound like a good idea?

jonesMUFCforever

Yes as long as it is a 27 month purchase card not a balance transfer card.
If it is a BT card does it offer money transfers?

If not it will not be much use.

chattychappy

Yep, the ideal thing would be a 0% on purchase card. If indeed there is a deal on money transfers, this will be at a cost, typically 2% to 4%.

Ebe_Scrooge

Just bear in mind, if you do have a 0% purchases card - you must make ( at least ) the minimum payment on time every month. If you miss or make a late payment, the 0% deal will be revoked and you'll immediately go on to their standard APR. It's safest to set up a Direct Debit for the minimum each month.

chattychappy

Ebe_Scrooge wrote: »

Just bear in mind, if you do have a 0% purchases card - you must make ( at least ) the minimum payment on time every month. If you miss or make a late payment, the 0% deal will be revoked and you'll immediately go on to their standard APR.

Yep

Ebe_Scrooge wrote: »

It's safest to set up a Direct Debit for the minimum each month.

I don't like DDs. But if the OP goes the DD route, he should understand:

1) People have lost deals because having set up a DD, they assumed future payments would be made this way - when in fact it there can be a lag. You must continue to make manual payment until the statement notes that the payment will be taken by DD.

2) Whilst you don't need to "remember" to pay your minimum, you now need to "remember" to have the monies available in the current account for payment to be taken. If there is insufficient, you can face charges on both accounts as well as two negative reports to the CRA.

3) People sometimes don't check the statements because they know a DD is in place. Big mistake - all sorts of things can go wrong, eg bank error, fraud.

4) It is best to pay more than the minimum, even if only £1 more. This will avoid a minimum payment marker on your CRA file.

eddddy

andy_d12003 wrote: »

I!!!8217;m thinking I might be better off using the credit card and when my wife goes back to work in November, we could probably pay it off within 6 months and still have the savings.

So are you planning to gradually increase the credit card balance from now until Nov 2018?

Then you're planning to start paying off the credit card balance in Nov 2018 and have it cleared by Apr 2019.

(So on average you might be borrowing money for about 6 months.)

chattychappy wrote: »

If indeed there is a deal on money transfers, this will be at a cost, typically 2% to 4%.

Paying 2% or 4% flat fee for an average of 6 months borrowing may not be a good deal.

What interest rate are you getting on your savings? Are there any withdrawal penalties?

It may be cheaper to use your savings.

(But if it's a 0% purchase CC with no fees, then it's definitely better to use the CC for purchases.)