Credit card -v- savings

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Hi there
I'm.new so please don't judge?

We currently have a 0% credit card purchases/balance transfer and have a balance without any interest acruing, my question is would you pay balance off with the small savings you have or just continue paying card monthly- We do pay more than minimum. Bearing I mind no interest on.credit card?

Thank you😀
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  • Vortigern
    Vortigern Posts: 3,243 Forumite
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    Just continue paying monthly, more than the minimum and ensure you have enough saved to pay the full balance when the 0% finishes.
  • PRAISETHESUN
    PRAISETHESUN Posts: 3,719 Forumite
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    The safest way is to pay off the balance as soon as possible - there will be no extra interest so any money you throw at the debt will be used to reduce the amount owed.

    If you are disciplined however you can save yourself a bit more money - only pay off the minimum balance and put any extra money aside into a dedicated savings pot that can earn some interest. Keep this money aside to be used ONLY to pay off the credit card debt when the 0% period ends. You will get to keep any interest earned. This is stoozing, and should only be done if you are certain you will be able to resist dipping into the savings pot and pay your card off in time otherwise the 1-3% earned will be lost by the 20+% interest rate of the credit card.
  • enthusiasticsaver
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    If you don't have other savings I would repay the credit card over a period of time rather than using savings. Make sure it is repaid though by the time the 0% deal expires.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • pinknsparkly
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    If you are organised, you will earn the most interest by making the minimum payments during the 0% interest period and save the rest of the money you are currently using to pay over the minimum in an interest earning savings account. Then just before the 0% interest free period ends, use your savings to pay off the remaining balance.

    However, if there is a risk that you'll forget to pay off the card before the 0% interest period ends, then the interest you'll pay on the card will probably be vastly more than the interest you'll make on the savings. In that case, I'd work out how much you should set your monthly repayments to be to ensure that you've paid off the entire balance by the end of the 0% interest period. Keep your current savings available as emergency savings to use rather than resorting to paying for emergencies on the credit card!

    If you cannot afford to set your monthly repayments high enough to pay off the entire balance by the end of the 0% interest period, then you could use your savings to make up the shortfall. But it is also important to have some emergency savings available to avoid needing to use credit cards for future emergencies!
    MFW2023 challenge #99: £1090.11 / £1,000 MFiT-T6 (Jan 2022 - Jan 2025) challenge #99: Reduce mortgage to £400,000. Current balance = £413,551.19 Initial MF date (23rd Aug 2022): Sep 2051 Current MF date: Jul 2051 Last updated: 15/06/2023
  • No_6
    No_6 Posts: 835 Forumite
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    Just make minimum payments until the account will change,
    they tell you on your statements, just read them.
    then have enough money, in savings to pay !

    if not, go for another card ? to balance transfer ?
    depends on your credit .
  • jcontest
    jcontest Posts: 223 Forumite
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    Odd how long I have been on these forums and only spotted this sub-thread today. We once "stoozed" quite a bit, but poor savings rates mixed with high balance transfer fee's stopped us from doing it a long time ago.


    Say your spending is £600 a month on the card. From that they would require a minimum of around £20 a month (assuming 3% minimum). So you "could" put £580 into one (or many) of the accounts offering 3-5% PA.


    Lets say that you can manage multiple ones and get an average of 4% PA. And assume your spending £600 per month (normal spend) and have the ability to pay the minimum (assumption again of 3% balance) and bank the rest.


    12 months in you would have debt showing of £5,940, have earned £136 in interest.
    24 months in you would have debt showing of £10,060, have earned £468 in interest.


    So look at it closely and ask yourself if your going to earn enough for it to be worth the hassle.


    £10k+ of credit card debt can be hard to achieve for people who don't have great credit. People who have great credit (and high limits) are probably not as eager to make this amount of money for the amount of hassle that it takes. So really it boils down more to you than anything.


    Hope I didn't make things too confusing! My wife says I am a confusing person.
  • gionnetto
    gionnetto Posts: 234 Forumite
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    Monica18 wrote: »
    We currently have a 0% credit card purchases/balance transfer and have a balance without any interest acruing, my question is would you pay balance off with the small savings you have or just continue paying card monthly

    First off, don't touch your savings, because they are maturing interest.

    Secondly, divide the balance you have on the 0% card by the number of 0% months you have let, and pay that amount religiously.

    In this way, you'll maximize the interest you'll gain from your savings AND the 0% interest from your credit card.

    :beer:
    Your cholesterol levels are not seen, or used, by your heart and arteries, so ignore it.
    :eek:.
  • mrs_T
    mrs_T Posts: 1,017 Forumite
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    jcontest wrote: »
    Odd how long I have been on these forums and only spotted this sub-thread today. We once "stoozed" quite a bit, but poor savings rates mixed with high balance transfer fee's stopped us from doing it a long time ago.


    Say your spending is £600 a month on the card. From that they would require a minimum of around £20 a month (assuming 3% minimum). So you "could" put £580 into one (or many) of the accounts offering 3-5% PA.


    Lets say that you can manage multiple ones and get an average of 4% PA. And assume your spending £600 per month (normal spend) and have the ability to pay the minimum (assumption again of 3% balance) and bank the rest.


    12 months in you would have debt showing of £5,940, have earned £136 in interest.
    24 months in you would have debt showing of £10,060, have earned £468 in interest.


    So look at it closely and ask yourself if your going to earn enough for it to be worth the hassle.


    £10k+ of credit card debt can be hard to achieve for people who don't have great credit. People who have great credit (and high limits) are probably not as eager to make this amount of money for the amount of hassle that it takes. So really it boils down more to you than anything.


    Hope I didn't make things too confusing! My wife says I am a confusing person.
    Which accounts do you mean? I've stopped stoozing because I can't find accounts to put the money in that make it worthwhile. I've 2 tsb classics and an HSBC for the regular saver. Am swapping Tesco who have cut their interest for RBS for the intro bonus. I have just bought a car partly on 0% cc but I'm looking at paying it off because I can't find anywhere to stooze the money.
  • bsms1147
    bsms1147 Posts: 2,261 Forumite
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    gionnetto wrote: »
    ...In this way, you'll maximize the interest you'll gain from your savings AND the 0% interest from your credit card.
    You'll make more money ('maximize') by paying only the minimum payment each month, and ensuring that the credit card is paid off in full at the end of the 0% period
  • gionnetto
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    bsms1147 wrote: »
    You'll make more money ('maximize') by paying only the minimum payment each month, and ensuring that the credit card is paid off in full at the end of the 0% period

    I have a 20-month 0% on purchase card (1800 limit, 360 ulitilized so far). My funds are in a Regular Saver (1000+, 3%) and an instant savings account (400, 1.5%).
    I plan on doing the Christmas shopping on the CC, make the minimum payments (25/mo), and clear it once the regular saver matures.
    Your cholesterol levels are not seen, or used, by your heart and arteries, so ignore it.
    :eek:.
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