Undecided

jack_tyler

Hello, looking for help/advice.

I have £2,500 in savings that I want to use to clear some debt on a credit card. I have 3 credit cards all at 0% interest. One card has £4,313.19, one has £8,021.00 and one has £2,732.40.

The 0% interest on these cards, is due to end next year. The card with the highest outstanding balance on, is due to end March next year, the card with £4,313.19 ends June next year and the card with £2,732.40 ends in May next year.

I just dont know what would be the best way to use this money I have in savings. Do I use it on the card with the highest balance? or do I use it on the card with the lowest balance? or do I pay a portion off on each card?  Any help would be much appreciated. Thank you

CliveOfIndia

The obvious choice is to use it against the card who's promotional rate expires the soonest.  I'd keep the cash in the savings account for now, may as well earn a bit of interest on it, then take it out to pay off the cards just before the promotional rate expires (take into account any notice you may have to give to withdraw it from the savings account, if applicable).

Probably more importantly though, how are you planning on paying off the rest of the outstanding balances when their 0% rates expire?  You may be able to transfer any remaining balances to another 0% card, but there's absolutely no guarantee that you'll be able to do so - so you need to have a plan B in place.

Brie

I agree with CliveofIndia as giving sensible advice.  

There is of course the possibility that if in February you cleared the smallest balance which has 0% until May that that card may be willing to increase your available credit AND offer a further 0% deal.  It's not a great solution but might help a bit.  It is however unlikely that they will increase your credit sufficiently to allow you to clear the March debt so likely you'll be paying silly% on whatever balance is still owing.  That's why you definitely need a plan B.  

jack_tyler

CliveOfIndia said:

The obvious choice is to use it against the card who's promotional rate expires the soonest.  I'd keep the cash in the savings account for now, may as well earn a bit of interest on it, then take it out to pay off the cards just before the promotional rate expires (take into account any notice you may have to give to withdraw it from the savings account, if applicable).

Probably more importantly though, how are you planning on paying off the rest of the outstanding balances when their 0% rates expire?  You may be able to transfer any remaining balances to another 0% card, but there's absolutely no guarantee that you'll be able to do so - so you need to have a plan B in place.

Thank you for your reply. I do have a plan B and that is, I would transfer any balances left on to another card I have that, which has no outstanding balance on and can offer me 0% for 9 months

GrumpyDil

jack_tyler said:

CliveOfIndia said:

The obvious choice is to use it against the card who's promotional rate expires the soonest.  I'd keep the cash in the savings account for now, may as well earn a bit of interest on it, then take it out to pay off the cards just before the promotional rate expires (take into account any notice you may have to give to withdraw it from the savings account, if applicable).

Probably more importantly though, how are you planning on paying off the rest of the outstanding balances when their 0% rates expire?  You may be able to transfer any remaining balances to another 0% card, but there's absolutely no guarantee that you'll be able to do so - so you need to have a plan B in place.

Thank you for your reply. I do have a plan B and that is, I would transfer any balances left on to another card I have that, which has no outstanding balance on and can offer me 0% for 9 months

Just be aware that when the time comes that offer may not exist as offers do vary month to month. 

Nasqueron

The flip side of earning interest on savings is that if you pay off some more of the debt now, that might mean other offers e.g. say the card with £2752 has a limit of £10k and you clear it and they then have a new offer, you could use it - lowering utilisation isn't a bad thing