Pay it off or save it up?

describes

Hello

I am really looking for some reassurance that I am on the right track. I have £8900 worth of credit card debt across 3 cards.
£1900 - 0% runs out in February 2019. Max limit £14k. (I have funds in a fixed bond that matures the day before the 0% runs out - perfect timing(!) - so I will pay that off immediately.
£4100 - 0% runs out in August 2020. Max limit £4,500
£2400 - 0% runs out in December 2020. Max limit £10k

My thought plan due to the other cards being on 0% until 2020, I will save it in another account to earn some interest in the meantime. My only doubt is that card 2 I am £400 away from my limit. Does anyone think that maybe I am best to pay down chunks as I go along, or should I save it into an account and pay it off in one go?

I am planning to put £500 a month away to get rid of it completely before the 0% interest rate ends either way.

Any advice would be greatly appreciated. Thank you

fatbelly

You're not spending on the card so it doesn't matter that you are close to the limit. The balance is coming down as you make your contractual payments anyway.

Your plan seems sound. It's just a shame that interest rates are so poor for savers.

DCFC79

Have you made a date in your phones calendar to pay it off before the 0% runs out ?
If you haven't then do so.

datlex

In answer to save or pay it off- Do both, pay off what you can. Put aside money to an emergency fund or other funds. Then ensure you are paying sufficient to clear. Are the bonds just for £1900. I would be careful on the timing here. Funds can take time to transfer. A day might not be sufficient. You might want to throw everything (allowing for minimum payments) at the £1900 - (you should be able to pay 3 x 500 +1 x 400), then use the bond money towards the £2400. (In march you can clear that with £500). Leaving you just the £4800 card to clear- (£4800/500= 9.6 months or Jan 2020). If you saved £200 a month and put aside £300 to pay it off it would take 16 months (or until July 2020). You would actually probably be able to get them cleared sooner and start building up your savings (16x 200 = £3200).

describes

It really is a shame about savers rates but I am thankful to TSB for the 5% on £1500!

I have the 0% period noted on my calendar, bullet journal and finance spreadsheet so I am covered.But great tip - thank you.

The money should become available the day before the 0% ends and I double checked this at the time. When my £1k matures in June, I will also be using that to pay off a bit of the cards.
Thankfully I have a 7 month emergency fund already - it became 7 months by accident so I have got that there and separate from the funds for the credit cards. I am looking to save on top of the £500 for my general savings so I should be sorted.

Thank you everyone

fatbelly

There are some half-decent regular saver accounts

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

which you may want to link with a current account switch and pick up some free cash on the way!

https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/

Willing2Learn

Since we are talking about 'half-decent' regular saving accounts, I thought I would mention the Danske Cash Reward account. It pays £7 monthly reward for a £2/month fee (meaning £5/month nett reward or £60 annually). It requires a £1,200 monthly pay-in and once monthly login (either website or app).

The Nationwide FlexDirect (current account) and the linked Nationwide Flex Regular Online Saver both pay out 5% interest (T&Cs apply). By my reckoning, this is the best deal currently available.

fatbelly

Willing2Learn wrote: »

Since we are talking about 'half-decent' regular saving accounts, I thought I would mention the Danske Cash Reward account.

I was thinking that this looked good, and I hadn't heard about it. Then I saw this in the t&cs

•If you are new to Danske Bank, you need to live in Northern Ireland.

Any way around this?

Willing2Learn

No, they say that in the website but not if you phone them. I live in London and opened up a new Danske Reward account last month. I've never banked with them before, I've never been to N/Ireland, nor do I have any link to the region.

See the thread below, for the discussion on this
https://forums.moneysavingexpert.com/discussion/comment/74731293#Comment_74731293

describes

Thank you. I already have the Nationwide regular saver
Shame they reduced the contribution maximum from £500 to £250