Advice on paying off some debt.

[Deleted User]

Hi I'm just looking for some advice on debt repayment, I currently have a CC with £5750 left on it and a loan with a settlement figure of £3450 which still has 2 years to run.

I'm paying the CC (0% balance transfer which runs out Sept 2023) £250 per month back but this morning I will up it to £450 per month.

I'm paying £170 per month on the loan (5.8%APR) and have a settlement figure of £3450 to pay.

I do have good savings and I do have disposable income to pay off the loan early and maybe pay off the CC with even more. However I have been reading over the last couple of days that you should not use savings to pay off debt but just what you can afford per month?

I was thinking maybe pay the loan off early (dip into savings) or say pay £750 a month on the loan and keep the CC set at £450 per month and not dip into the savings vastly.

Any advice please?

fatbelly

Generally you should use savings to pay off debt as the interest on savings is typically less than interest on lending.

The thought of not running your savings to zero is around an emergency fund and the fact that most peoples' expenditure is set to rise far more than their income.

If you can pay off the loan, I would do that.

£450 per month to the credit card pretty much clears the credit card before the 0% period expires.

EssexHebridean

It sounds as though there would be a good saving to be made by clearing the loan early? If that is the case, and the money is there to do it, I would go ahead with that, while leaving the amount you were considering paying to the CC sitting as an emergency fund. Once the loan payment has gone, that will give you an additional £170 per month to rebuild your savings (I'd consider throwing this at a regular saver account with decent interest if it were me), and if there IS anything still left on the card when the 0% comes to an end, you'll be able to clear it straight off. 

Mimi_Arc_en_ciel

Deleted_User said:

Hi I'm just looking for some advice on debt repayment, I currently have a CC with £5750 left on it and a loan with a settlement figure of £3450 which still has 2 years to run.

I'm paying the CC (0% balance transfer which runs out Sept 2023) £250 per month back but this morning I will up it to £450 per month.

I'm paying £170 per month on the loan (5.8%APR) and have a settlement figure of £3450 to pay.

I do have good savings and I do have disposable income to pay off the loan early and maybe pay off the CC with even more. However I have been reading over the last couple of days that you should not use savings to pay off debt but just what you can afford per month?

I was thinking maybe pay the loan off early (dip into savings) or say pay £750 a month on the loan and keep the CC set at £450 per month and not dip into the savings vastly.

Any advice please?

Your loan will be charging you way more interest than what you will gain on the savings. 

I would: 

Pay Loan off with savings.

Leave CC at 0% and paying the £250 (You aren't being charged interest on this) 

Start rebuilding your savings which will gain interest until its time to pay the CC off. 

[Deleted User]

Thanks, I'm being daft here, I have some decent savings and I like to see the amount there being healthy, hence the request for advice, if I pay the loan off I'll still have good savings its just there's a part of me that doesn't want to see the savings drop £3400 in one go...

That may sound really daft to you all but I've always been brought up on having an emergency fund if anything goes wrong, I don't know why I've developed this trait in later life as when I was younger (early working career) and if I owed money I always wanted to pay it back asap, so the same should apply here...

I'm going to pay it off later and just leave the CC at £450, that should get all my debt apart from the mortgage and car lease payments which is debt off my books...