Worried about £13k savings vs debt

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?
stay lucky!
Steve.
«134

Comments

  • Malestrom
    Malestrom Posts: 983 Forumite
    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!
    He huihuinga taangata he pukenga whakaaro – A meeting of people; a wellspring of ideas (Maori proverb)
  • Willsnarf1983
    Willsnarf1983 Posts: 1,928 Forumite
    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
    SShhhhhhhhhhhhhhhhhhhhhhh
  • thaylock
    thaylock Posts: 234 Forumite
    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
    Willsnarf1983 Posts: 1,928 Forumite
    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
    SShhhhhhhhhhhhhhhhhhhhhhh
  • Martini
    Martini Posts: 607 Forumite
    First Anniversary Combo Breaker
    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!
    Keep Smiling
    :) Site member number 24 :)
  • Willsnarf1983
    Willsnarf1983 Posts: 1,928 Forumite
    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
    SShhhhhhhhhhhhhhhhhhhhhhh
  • thaylock
    thaylock Posts: 234 Forumite
    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
    Martini Posts: 607 Forumite
    First Anniversary Combo Breaker
    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!
    Keep Smiling
    :) Site member number 24 :)
  • thaylock
    thaylock Posts: 234 Forumite
    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
    CTT_2 Posts: 403 Forumite
    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.
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