Should I pay off in full now or wait until just before the 0% deal ends

Nervalslobster

I have just over £4K in credit card debt which was transferred to a 0% card in April of this year. The 0% deal runs out in October 2024. I have been paying this off at a rate of about £200 a month and I have no intention of spending on this card. 

Recently I am in a position to pay that debt (my only debt) off in full. Should I do this, or should I invest the money that I have come into (about £50k) and continue with the monthly payments, paying off in full just before the 0% deal finishes? I don’t plan to touch my windfall otherwise. Any advice would be much appreciated. 

grumbler

I think the answer is obvious.

£4K left in a 5% savings account for 11 months will make you £4K*5%*11/12=£183.

A little less actually because you have to make minimum payments, but better rates are available even for easy-access accounts, not to mention fixed-rate ones.

CliveOfIndia

All other things being equal, it makes eminent sense to earn as much interest as you can on the savings whilst paying the minimum to the credit card.  Obviously this assumes that you are disciplined enough to not touch the savings, but to keep them ready to pay off the card when the time comes (which it sounds like you are).

The only consideration might be whether you'll be looking for any further credit at some point between now and next year.  Any application you make will take into account the debt that you've currently got, so it may affect the amount or interest rate you're offered.  But if you're not anticipating taking out any further credit then, as rightly pointed out by the previous poster, it's a no-brainer.

Just make sure that you have instant access to your savings - or, if you do need to give notice, then make sure you give the appropriate notice so that you're able to access the cash when you need it.