Pay off now or wait? 29 December 2020 at 4:53PM in Debt free diaries 10 replies 181 views

yourfuture_21

Evening all, 
 I have spent many years in debt, sadly!
I now  have £1,055 left on a credit card at 0%. I do have £2,000 to my name, but can't decide if I should just keep paying it off or pay it off all in one go now.
The £2,000 is all I have to my name, so I'm panicking that if I pay it off all in one now, I won't have that Emergency Fund as back up.
But on the other hand, I'd love to say I have zero debt. 
It's 0% until July 2021.
Any advice? 

joedenise

I'd keep paying it off but make sure it's cleared before the 0% ends.  Definitely best to hang on to your Emergency Fund in case any needs replacing so that you can buy it without resorting to CC again.

stokegal

First of all congratulations for having an Emergency Fund and having just 1 debt left at 0%

The sensible option would probably be to pay off the credit card bit by bit before the 0% ends however the temptation to be debt free would be too much for me and I would pay it all off and start building the emergency fund again.

Are you looking to apply for any other credit like a mortgage soon? As less outstanding debt would may favourable, however your credit file may benefit from seeing you making regular payments. 

GeorgianaCavendish

When does the 0% end on your credit card? I would pay a bit off each month to clear it before the rate changes, but keep the £2K cash on hand in case of an emergency. 

yourfuture_21

GeorgianaCavendish said:

When does the 0% end on your credit card? I would pay a bit off each month to clear it before the rate changes, but keep the £2K cash on hand in case of an emergency. 

The 0% ends in July

yourfuture_21

stokegal said:

First of all congratulations for having an Emergency Fund and having just 1 debt left at 0%

The sensible option would probably be to pay off the credit card bit by bit before the 0% ends however the temptation to be debt free would be too much for me and I would pay it all off and start building the emergency fund again.

Are you looking to apply for any other credit like a mortgage soon? As less outstanding debt would may favourable, however your credit file may benefit from seeing you making regular payments. 

Not looking at a mortgage for a couple of years, I want a good chunk of savings behind me first. 

yourfuture_21

I'm going to bag as much overtime as possible in the NY and any extra I will throw towards it. 
It started because I had a dream the other night that I was debt free but then my car broke down and I had to ask my parents for a loan...in the dream I was heartbroken because I've not borrowed a penny off them for many years.
Ha ha, crazy when I used to be £10,00+ in debt and at one point it didn't bother me one but, but after my LBM I never want to be in that position again. 

GeorgianaCavendish

yourfuture_21 said:

GeorgianaCavendish said:

When does the 0% end on your credit card? I would pay a bit off each month to clear it before the rate changes, but keep the £2K cash on hand in case of an emergency. 

The 0% ends in July

OK, would you be able to pay £175 a month off between now and July? If so I would do that, however, if you feel that having the credit card open would be a risk because you might spend on it, or not make the payments needed to pay it all off then use the cash to clear the credit card. In either scenario, you'll be able to say you have zero debt during 2021  

yourfuture_21

I've replied to a post, but it hasn't come up.
Yes, I can pay the £175 each month and any overtime I'll throw towards it. Think I'll just try and clear it as fast as possible and not touch my EF, as I don't actually think I'd feel as calm without it as back up. And I suppose if anything major happened I had to pay if off in one go for whatevee reason, then I've got it there.
Thank you :-) 

CreditCardJunkie

Not a popular choice but I chose to pay off the 0% card and only have a small EF (although while paying off debt  everything that could go wrong, did go wrong so basically all appliances, boiler, car etc is now all under warranty as it all had to be replaced 😂🙈)

enthusiasticsaver

I agree that you should leave your EF intact but generally we recommend £1000 as a start so you could afford to pay it off and then start 2021 debt free. As it is 0% until July though splitting the £1055 into seven months is perfectly ok. Unless your job is insecure or you know you have a dodgy car or boiler etc though my choice would be to pay off the CC. You will still have £945 as an EF.