Repay 0% credit card or save a pot of money?

SarahJK

Not entirely sure where to put this question but hopefully this is a good place.

I have two credit cards on 0% interest and I'm paying off £200 per month each on them. I'm going to receive some money soon which could wipe off one of the credit cards so then I'd only be paying £200 per month for one of them or could potentially up the payment to £400 to wipe it sooner.

However I'm also buying a house soon so the extra money may come in handy for house stuff or just to have in my savings for when it might be needed.

So I'm not sure what to do
Wipe one of the debts but have no savings and still pay off other card
Or
Keep paying £400 per month and have some savings

Thank you

middleclassbutpoor

Clear your debt through repaying one and snowballing the payment to £400.

Pay for your house stuff when you can afford it and your unsecured debt has been fully cleared.

Ensure you have an emergency fund £1000.

Don't buy a house until you have cleared your debts either. Houses need money for repairs and furniture etc - don't over burden yourself with debt to afford things you cant really afford without borrowing.

EimearF

I second clearing the debt first. it will be hard to get a mortgage with a £400 minimum payment on cards.

enthusiasticsaver

The first thing I would say is do you have an emergency savings account? Keeping £1k aside for that should be a priority.

How much is the debt and when is it due to be repaid? Will it be within the interest free deal period?

If you are looking to move then having debt will affect any mortgage you may apply for. I also strongly recommend you save before going down this route as you will need savings for legal costs, removal costs etc before even considering furniture. I suggest you clear the debt first. So I would put £1k in savings from your windfall and put the rest towards the debt. When the debt is repaid then save for the move. Much easier to move house when you do not have other debt to repay.

SarahJK

Thank you all.
Just to add that the mortgage has been approved with current debt taken into account and I have the money set aside for the moving costs, legal fees etc from the sale of our previous house. We have furniture from our old house too though we will need to buy some essential furniture e.g. New beds for children

SarahJK

Oh forgot to answer some of your questions
The credit card debt is just short of £8000 over the two cards and the monthly payments will pay it off within the interest free period

middleclassbutpoor

Plan your expenses so you can buy these with cash - so new beds etc.

You normally have a few months of getting into a routine with bills etc so again make sure you are budgeting properly for everything to avoid having to use debt to cover you.

In this instance as you are already moving house, I may be tempted to not snowball the debt and put the £200 of the £400 into savings until I know I am now settled with bills and new home costs that you experience ensuring that I want to use this to knock back off my credit card as a lump sum.

For example you put £200 to remaining credit card and £200 into a savings account for 6 months with the view that £600 will go off the card in 3 months but you may need to dip into this to cover short term cashflow.

Unicorn_cottage

Don't forget you can always buy stuff for the house 2nd hand. FB marketplace is a great resource nowadays. Everything doesn't have to be new, i.e. you could buy 2nd hand bedframes for the kids and then just new mattresses from Ikea etc.

theoretica

When do the 0% deals end? You could put the money into savings and pay off the card just before then end unless you had had a huge unexpected need for it - but you might be more tempted to spend it if you had it in savings.