Paying off credit card balance with savings

BerryTina

Does anyone find it emotionally /mentally difficult to pay off a small credit card balance with savings?

It’s a small balance to be cleared, but honestly the thought of seeing my savings going down…

I know the costs of interest rates is higher then the return of savings so I’ve been doing it in stages I.e. £100 per day and it’ll be clear in the next few days in time for the due date…

Doing it this way because the thought of my direct debit clearing the statement in full in one go is A LOT!

Does anyone else ever feel this way?

[Deleted User]

Pay it in one go and make both you and your future self richer.

Jami74

BerryTina said:

Does anyone find it emotionally /mentally difficult to pay off a small credit card balance with savings?

It’s a small balance to be cleared, but honestly the thought of seeing my savings going down…

I have the opposite problem, credit balance at 0% and savings at 1%. I've been holding out for as long as I can because I love earning a couple of quid interest each month, but over the weekend I couldn't look at the debt any longer so paid it off. I thought I'd feel regretful when I woke up the next morning and saw my savings had reduced but I just felt excited to rebuild my savings without that negative balance sneering at me.

sonofmerton

BerryTina said:

Does anyone find it emotionally /mentally difficult to pay off a small credit card balance with savings?

It’s a small balance to be cleared, but honestly the thought of seeing my savings going down…

I know the costs of interest rates is higher then the return of savings so I’ve been doing it in stages I.e. £100 per day and it’ll be clear in the next few days in time for the due date…

Doing it this way because the thought of my direct debit clearing the statement in full in one go is A LOT!

Does anyone else ever feel this way?

depends how much savings someone has. if you have 5k but owe 5k, plenty on here will tell you to pay it in one go. i totally disagree. never leave yourself short. certainly having helped people financially in the past, their bugbear is paying over big chunks to pay something off. understandable. i would say pay it as quickly as you can but never leave yourself short should an emergency happen. otherwise you will be borrowing again. if it is just a small balance and you have plenty of savings far more than that, just pay it all off now. 

BerryTina

Hey , I’ve paid it all off 

Dandytf

I'm satisfied with continuous incremental re payments.
Most of my savings are isa held,so min 5-15 or more years.
I could re pay in full, though keeping some funds in Starling etc for MOT etc works well.

I've found working from debt percentages is my best approach, ensuring minimum credit use.

thanks OP 

GN_TDCI

Depends how you're living in fairness. I'm pretty much hand-to-mouth compared to many, but not poor. I budget by paying my debts weekly (I get paid weekly) where possible.

For me, clearing a debt off frees up an amount each week that I can instantly see the benefit of. Even if it's £10 a week, its a benefit I can see.

I do like to have a few quid in a savings pot though. You should never leave yourself without anything disposable if you can help it. If you have £5k saved and owe £5k, then it would probably be wisest to clear £4k off your debt and keep that £1k in savings as a just incase fund.

As an alternative perspective, if you can afford to save up, why not keep the savings as it but increase future payments to the debt. Sure, you're not saving any more up, but you're clearing debt AND keeping savings steady.

phillw

GN_TDCI said:

If you have £5k saved and owe £5k, then it would probably be wisest to clear £4k off your debt and keep that £1k in savings as a just incase fund.

Certainly clear the debt if the interest is higher than the savings, but it's not wise to pay off a debt when your savings are making more interest than your debts.

If you've got high debts then lenders are less likely to lend to you if you go on the spend, which is a good thing.

Jasonh2015

I did, I got bored of noting the payment on my out going’s each month. It was interest free until Nov, but I had the cash and felt better after I paid it. The irony is they’re now spamming me with balance transfers and I don’t need them 🤓