Should i withdraw from LISA to pay credit card

harvoo

Hi,
I’ve got £3k on a credit card and £8k in a LISA. My credit card interest is 28%. Should i use my Lisa to pay off my credit card?

WillPS

If there's no other option, probably yes. Have you exhausted all potential 0% balance transfer avenues?

harvoo

WillPS said:

If there's no other option, probably yes. Have you exhausted all potential 0% balance transfer avenues?

I could balance transfer but was just thinking about clearing the debt and not having it, not going to buy a house for 2 years 

Angelica123

If you are planning on buying your first house in a few years time, then it would be worth trying to save the LISA until then. You will get penalised for withdrawing money. 

You would be better off transferring it to a 0% balance CC and creating a payment plan to pay it off by the time the 0% runs out. 

[Deleted User]

28% is hefty and i would have thought transferring it to a lower rate would be first option, if not possible use the savings because you're using/losing more than you're benefitting from in the savings.

WillPS

harvoo said:

WillPS said:

If there's no other option, probably yes. Have you exhausted all potential 0% balance transfer avenues?

I could balance transfer but was just thinking about clearing the debt and not having it, not going to buy a house for 2 years 

If other options are in play then do those. Hopefully you can get a decent length 0% deal which will allow you to reduce this debt to zero and you'll lose none of the bonus you've already saved.

daivid

It will cost £750 to withdraw £3k from the LISA, if not paying down (or allowing increase to) the debt the CC will cost £840 a year in interest. If you can make a BT that stays at 0% until you can either clear the debt or complete a purchase and claim the LISA (if that then puts you in a position to pay off the CC) then that would be financially beneficial.

MEM62

Not the best of ideas to pay a 25% penalty to withdraw money from your LISA as, paying off that £3k debt will cost you £3,750.  Cut back on all your spending and throw the extra cash at the credit card.  Some short term pain will not only clear the card but also motivate you to be less likely to put yourself in the same position in future.