Debt vs Mortgage

MCam

Just trying to wrap my head around this so any help would be appreciated. I currently have a fairly small amount of debt (£6,000) on a 0% balance transfer card until March 2020, and we've recently purchased a property so obviously we have a mortgage. In my head, it makes the most sense to pay off the minimum amount on the balance transfer card, and to overpay the rest on our mortgage. It does mean I'll have to shuffle the card balance to another card in 2020 but considering the transfer fees are so low, it seems like a no brainer? Someone tell me I'm wrong, or why I'm right.

Thank you!

ryanm8655

Makes sense when the debt is on 0%, yes.

Have you got an emergency fund built up?

One thing to be wary of is if your circumstances change and also the terms on early repayment of your mortgage.

greensalad

Depends on what you prefer. The emotional side of having no unsecured debts (no credit cards, loans, car loans etc) vs the net worth at the end of your life. 

Personally I'd prefer to pay off the credit card and have it gone from my life forever than push more money into the mortgage right now.

You also never know what the future holds. 0% cards could become impossible to get due to changes in your circumstances or in the world at large.

Naomim

Another thing to think of is how often you can move the debt onto 0% and will that class you as in persistent debt if it keeps rolling and will you keep being offered 0% deals?

Naomim

Emmia

I'd pay the card off, and then make overpayments on the mortgage - if things change and 0% cards become difficult to get, then your debt on the card will shoot up courtesy of the interest rates or becomes more expensive to repay.

Also a new 0% card may come with a lower limit, which will mean part of the £6k may attract the full interest rate, even if you can transfer part of the debt.

MCam

Thank you all, some things to think about there. The overwhelming majority says pay off the credit card so I think I'll do that.

Majoggy

I would be inclined to pay off the debt as fast as possible - there is not guarantee that you will have access to the same zero percent options in a years time.

Or take the middle road and split paying off the debt and overpayments on your mortgage 50/50.

enthusiasticsaver

March 2020?  We are already  in July 2020 so are you paying interest on it  now or is that a mistype? 
Bear in mind it will not always be easy to get 0% deals and even paying BT  fees can add up.  Most credit card companies offer the deals in the hope you just pay minimums and pay the interest when the deals expire and many people do this and dig a massive hole for themselves.  Even those who think they are money savvy and just pay the minimums and constantly Balance transfer until they cannot do it any more can dig a hole of debt for themselves.  I would always get rid of credit cards before overpaying the mortgage. 

bamgbost

Get rid of the unsecured debt first