Worried about £13k savings vs debt

Jon_J

I have £6.5k on credit cards - 0% APR and a £1800 18.9% APR.

I also have £13k savings via an inheritance. Should I clear the debt immediately and leave £4700 or pay a set amount each month and continue to earn interest on the savings at 5% APR?

Or should I keep 6 months worth of income in case of emergenies, i.e redundancy. This equates to £12,000, leaving £1000 for rainy day or offset against the debt?

Malestrom

Pay off the £1800 @ 18.9% but keep the 6.5k so long as it stays at 0%. Its not really debt if you have the means to repay it but you dont want to be paying interest on any of it!

Willsnarf1983

i agree with malestrom, pay the 1800 off and then wait untill u start paying interest before paying of the £6k one and u'll gani the interest and stil have a very comfortable amount for safety

Will

thaylock

Pay all of it off, you will feel much better for being debt free ! What's the point of retaining the £6.5 debt, you have to pay it off sooner or later, do it NOW !

Willsnarf1983

th pt is that say teh 0% of for 6 months he can get 6 months of niterest on the 6k and then pay it off without paying any interest

obv u have to make sure that if u do this u don't spend more into debt and really its whatever makes u feel ahppier


Will

Martini

No, Keep the interest free money as long as you can in a savings account making you money! Get rid of the debt you are paying interest on. 18.9% is too high! The interest free money is not debt as long as you pay it off as soon as the offer term ends!

Willsnarf1983

mmm what rubbish spelling sorry...what i meant to say was, 6 months of interest from savings is better than paying it of and not getting this interest

Will

thaylock

Well, either you like living with debt or you don't, 6 months interest (taxable) means you make approx £120 (after tax), is it really worth it ? I paid off my mortgage with a lump sum payment years ago & glad I did, depends on your attitude torwards debt I suppose.

Martini

Thaylock,
You were right to pay off your mortgage with any spare cash that you had as you were paying interest on it! This interest free loan is a completely different matter. I am making about £30 a month at the moment from interest free money. I have to pay larger payments to the CC company but I have all their cash tucked away ready to pay them back! When they want their money back I will have paid a lot of it off due to my monthly payments.
What is left is all mine and I 've made a load in interest as well.
You have to be very controlled and make sure you do not spend any of the interest free money. Anyone would think I was very generous if I was to give them £30 a month for 18 months wouldn't they? Well "Capital One" are doing just that!

thaylock

Well, what kind of credit card statement would you prefer to see, £0 balance or £6500 balance, I really can't see the point of messing about for the sake of a few quid, again, it's all down to your attitude towards debt. I would still pay it off.

CTT_2

thaylock wrote:

Well, what kind of credit card statement would you prefer to see, £0 balance or £6500 balance, I really can't see the point of messing about for the sake of a few quid, again, it's all down to your attitude towards debt. I would still pay it off.

Well a few quid a month could help save some lives in third world countries.
I for one make money on free cash and give a certain amount to my favourite charity.