Paying 0% credit card off with money I have just inherited

de1976

Good morning all
i have inherited a small amount of money. I have £3k on a credit card that I have just recently done a balance transfer on. I have until 2024 to pay off 0%. My question is do I just keep paying and make sure balance is clear by the end of the 0% or do I pay off now. ? Many thanks Denise 

MrFrugalFever

I think that would depend on your overall financial situation, such as, can you continue to service your debt at a level each month that ensures that it will be clear fully by the end of the 0% offer and not use your small inheritance (pretending it is not even there). If that is the case, I’d carry on with 0% and put small inheritance in highest interest rate account,

there’s a thread on savings and investments section which keeps people updated with highest interest rates on easy access accounts.

If you believe owing £3k is going to put you in to financial hardship if it isn’t cleared ASAP then I would pay off your CC. MSE would likely encourage NO DEBT at all.

de1976

Thank you for your advise 

[Deleted User]

I'd put the sum or at least some of it, in a year long saver, paying the minimum (+£1) a month onto the BT card. Club Lloyds account is an easy one paying 5.12% interest on up to £400 a monthly deposit for a year and if you do a switch to them via a burner account you get £150 plus if you can meet the criteria i.e. bouncing £1500 in and out every month you can avoid the fee. There are other savings with a fixed 1 year rate and that way you get the interest as extra cash.

If you can afford the monthly payments on the BT and are disciplined not to spend the savings, it's a no brainer

MalMonroe

Hi, I was in a similar situation recently. I did a balance transfer to a 0% card and then received an unexpected but very welcome small lump sum. Should I pay off the card or not? I decided to pay it off in full. 

The credit card debt was manageable and I knew I'd be able to pay it off within the time frame but it felt so good to clear the whole thing and not have any debt hanging around. Probably not the most savvy financial option but I'm no stoozer and just felt it might look better on my credit reports to have no debt hanging around, especially as I'm hoping to apply for a mortgage next year.

Just my own personal experience and view, of course. I do still have a credit card which I use regularly but it's set to clear the full balance at the end of each month. Having been in major debt in the past I think I'm now just programmed to fear debt just in case I find myself in the position, again, of not being able to manage it. 

de1976

Thank you for your reply.  

born_again

Do you receive benefits? That maybe affected by the savings? Is so, pay in full now.


If not.
Put £3K in seperate savings acc, to pay the balance off, at end of term. Continue to pay balance as you have up to now. That way you will/should not touch the £3K.

adindas

de1976 said:

Good morning all
i have inherited a small amount of money. I have £3k on a credit card that I have just recently done a balance transfer on. I have until 2024 to pay off 0%. My question is do I just keep paying and make sure balance is clear by the end of the 0% or do I pay off now. ? Many thanks Denise 

It is 0% until 2024, so you do not pay interest until 2024. If I were you I would not pay it off. I would just keep paying minimum balance.

Put the money you supposed to be using to pay your CC in one year fixes rate or at least instant access saving account earning interest of 2.81%. When the promotional term is due, you use that money to pay all of the balance in one off payment.

But for this it will need a discipline, you make sure you are do not touch that money. Just profiting from the interest you get. But TBH the interest is quite small considering time to open and managing that account. But at least people could use it for learning the basic principle of stoozing.