Best way to pay off 0% credit card debt when I have savings

specialhatspecialhat Forumite
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Hello! I recently had to do some renovation works on my house which are now complete. I had to borrow some money to do it (I kept what's left of my savings as a float for unexpected expenses and also as an emergency fund). I'm now in the following situation:

Savings: £7,930
Tesco credit card: £4,756.98 at 0% until Feb '23. Min payment 1%
Sainsbury's credit card: £11,136.90 at 0% until March '24. Min payment 2.25%
Total current debt: £15,893.88
Debt minus savings: £7,962.88

I am in the fortunate position where I can afford to throw £1,000 a month at the debt.

I am single and self-employed and, especially given the cost of living at the moment, I don't want to wipe out all my savings but obviously I also want to clear the debt as soon as I can so I can start saving in earnest again.

I was thinking about putting £2k from my savings onto the Tesco card then paying back the remaining balance split evenly over the remaining months, while paying the minimum on the Sainsbury's card, then moving to aggressively paying Sainsbury's back.

I am open to suggestions though please! 

Replies

  • edited 13 August 2022 at 11:47AM
    moleratmolerat Forumite
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    edited 13 August 2022 at 11:47AM
    Leave your savings at the moment.  Minimum to Sains and rest of £1K to Tesco plus anything you have spare at end of month,  Review in January and use savings to pay off Tesco if necessary.  Then divide Sains balance by months left and pay that each month - should easily be covered by the £1K.  Easily achieved with minimal disturbance to savings.
  • specialhatspecialhat Forumite
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    molerat said:
    Leave your savings at the moment.  Minimum to Sains and rest of £1K to Tesco plus anything you have spare at end of month,  Review in January and use savings to pay off Tesco if necessary.  Then divide Sains balance by months left and pay that each month - should easily be covered by the £1K.  Easily achieved with minimal disturbance to savings.
    Thank you! That makes sense. I think I just needed someone else to advise as I've been plotting out all sorts of variations and couldn't tell what was most sensible.
  • edited 13 August 2022 at 12:03PM
    moleratmolerat Forumite
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    edited 13 August 2022 at 12:03PM
    Alternatively you could pay minimum to both and put remainder of £1K plus anything left at end of month into savings and pay off Tesco from savings at end of offer then carry on with minimum to Sains and remainder again into savings and pay off Sains from savings at end of term.  Means being a bit more disciplined though in not using savings for anything else in the mean time.  First option gives you the warm fuzzy feeling of seeing balance going down quickly but second is probably more financially sound as it will make some money from interest in savings.
  • BrieBrie Forumite
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    What Molerat said.  Why pay off anything sooner than you have to.  Can you pop your savings somewhere to collect a bit of interest - I've been hearing things about 3% being possible now.  Obviously you need to have it accessible for February.

    Don't forget you've paid a fee to get the 0% deal.  You have the right to take advantage of it as much as possible.
    "Never retract, never explain, never apologise; get things done and let them howl.”

    2023 £1 a day  £54.26/365
  • edited 13 August 2022 at 12:38PM
    specialhatspecialhat Forumite
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    edited 13 August 2022 at 12:38PM
    Brie said:
    What Molerat said.  Why pay off anything sooner than you have to.  Can you pop your savings somewhere to collect a bit of interest - I've been hearing things about 3% being possible now.  Obviously you need to have it accessible for February.

    Don't forget you've paid a fee to get the 0% deal.  You have the right to take advantage of it as much as possible.
    I could get the YBS Regular Saver for a year and earn 5% (a princely £161.92). I'm never sure about regular savers though as you're effectively locking your money away for not that much! As it's trickled in I'd still have savings available come February.
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