Debt versus help to buy ISA 24 July 2022 at 11:13AM in Debt-free wannabe 3 replies 191 views

annahaigh11

Do people think that it’s a good move to keep paying into an ISA HTB whilst having credit card debt? My workings show the 25% tax increase given with the HTB would outway monthly payments with interest on Cards, however not sure my workings are true? 

RAS

Your issue down the line might be that your credit card debts prevent you getting a mortgage even though you've got a deposit. At best it will reduce the amount you can borrow.

So you need both.

Do an SOA, even if you don't share it here, and set about tackling that debt.

ManyWays

The HTB 25% is a one-off and the next year you get nothing.
The 19% interest (or whatever you are paying) charged by a card happens every year. 

lopsyfa

I agree with the previous posters generally but there may be cases where it makes sense to pay into the help to buy ISA.

If your credit cards are on 0%, it may make sense to pay into HTB and then plan to pay off the balance before the promotional rate ends. Otherwise, no logic in paying the HTB while paying interest on the credit card since, as mentioned above, the interest on the credit card is continuous (and compounding) while the HTB top-up is a one off. Also, the credit card debt may affect your mortgage affordability.