Dipping into pension pot to pay off credit card debt.

underboyleheating

Firstly, apologies if this is the wrong section for this question. However, here goes...

Is it a good idea to dip into my private pension pot to pay off the outstanding balance on my one and only credit card? My bank (RBS) are now asking me to pay a higher percentage 2.5%, plus interest and fees. I don’t have a savings lump sum to pay it off and I see this as a way of just clearing what I owe. Any advice is appreciated.

Willing2Learn

Wait! How much is your debt on the card? Do you owe any other debts?

You could try and get a 0% balance transfer card to transfer your cc debt, instead of touching the pension.

https://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/

Silvertabby

How old are you? If you are under 55, then it's a non-starter.

underboyleheating

Willing2Learn wrote: »

Wait! How much is your debt on the card? Do you owe any other debts?

You could try and get a 0% balance transfer card to transfer your cc debt, instead of touching the pension.

I have no other debts but my mortgage. I owe 5k and I can’t see me paying it off anytime soon. The pension pot dip seemed like a quick option to a long standing debt.

[Deleted User]

If you're still contributing to your pension, you need to look at diverting some into everyday savings, as your situation seems perilously unbalanced.

underboyleheating

Silvertabby wrote: »

How old are you? If you are under 55, then it's a non-starter.

I’m 56 years old in October.

Willing2Learn

underboyleheating wrote: »

...I owe 5k and I can’t see me paying it off anytime soon. The pension pot dip seemed like a quick option to a long standing debt.

How much are you currently paying per month to service the card, and how much do they want to raise it to?

MallyGirl

if you take anything beyond the 25% tax free lump sum then you will be restricting the amount you (and your employer) can pay in to the pension in future.
Without knowing more details no one could really comment on whether this is a good idea - although as a fundamental principle it is unlikely to be good and your future pensioner self is likely to curse you for not just tightening the belt and paying it off in the normal way.

lisyloo

What type of pension do you have?
Is it a SIPP? or a company plan?


A pension is not a current account and there may be serious implcations from stating to draw from it.
So please don't do anything until fully researched.
Can you start by telling us what type of pension you have.


Have you done an SOA (statement of affarirs).
If you can tell communicate your incomings and outgoing then you might get some good advice.

underboyleheating

Willing2Learn wrote: »

How much are you currently paying per month to service the card, and how much do they want to raise it to?

The minimum payment is roughly £120 per month. The percentage will rise 2.5%, plus interest and fees. I pay more to it when I can, however, they pointed out that my payments are low in comparison to the outstanding debt.

Willing2Learn

underboyleheating wrote: »

The minimum payment is roughly £120 per month. The percentage will rise 2.5%, plus interest and fees. I pay more to it when I can, however, they pointed out that my payments are low in comparison to the outstanding debt.

If you could get a 0% balance transfer card on a 36 months promotion then the amount due every month would be £139/month (plus initial transfer fee). You would then be debt free after 3 years. Is that squeezable do you think?

I *think* there is also a possible 48 month promotion available too, which would reduce the monthly payments...