Credit Card Query on 0% - To pay or not to pay?

Robyn182

Hi, 

I have a 0% CC with Barclays with the 0% due to end December 2024.  My balance is £3k with a £4k limit, so I'm keen to bring my utilisation down.  I've been preapproved for a 0% balance transfer with Natwest with a higher limit, so I'm trying to decide, do I pay off a lump sum of my Barclays to bring the utilisation down as I have the funds to do so, or am I better off transferring part of it to a new 0% card so my utilisation comes down.  In my opinion I don't see the point of paying off a 0% card in bulk (other than to bring my utilisation down).  My credit file is good, however the only flag on there is to say trying bringing my utilisation down.  Should I pay off, or balance transfer?  Experienced insights would be welcomed   

We may be looking to put our house on the market in the next few months (which may take a a while to sell...who knows?!), so will be applying for another mortgage and I'm conscious of my file looking good, and will another card make my file look dodgy - But I also don't know when we will be getting a new mortgage if the house takes a while to sell, so want to move quickly with a new card if needed!

Thanks in advance.  

thegentleway

I’d pay off my 0% credit cards before applying for a mortgage. Otherwise I keep the cash in saving account

Martico

If you're able to pay down £300 per month you'll be in the best position

Robyn182

Ok thank you.  I'll look to pay off bigger chunks over the coming months so my utilisation looks a little better prior to the mortgage.  If the mortgage wasn't pending I'd just do the 0% BT card.  Thanks for the help.  

Nasqueron

Ignore the utilisation CRA nonsense, lenders will look at your total debt

If you have £3k debt, shifting it to another deal running for another 18 months will impact your mortgage application though by how much will depend on your current house value/what you want to borrow e.g. £100k mortgage on £20k salary would be impacted a lot more than £500k mortgage with £350k of equity and earning £50k a year.

If you want to sell and remortgage, I would put the funds in an easy access saver like Kroo bank current account and pay the card down over the next few months, ideally leaving a good couple of months from paying off to applying for a mortgage

Robyn182

Ok thanks that's really useful.  I'll look to get it paid off over the next couple of months so I'm in a good place for a mortgage.  The £3k is the only debt I have (outside of the mortgage) and earn circa £60k, but we will be looking to take on a bigger mortgage @ 10% LTV so I think the sensible option is to bring my credit card balance down whilst we go through buying a new home.  

elkiedee

If you're able to clear your debt in a couple of months, or even within the term of the existing 0% offer, it doesn't seem worth applying for another card, certainly not if you have to pay a fee to transfer a balance with 9 months or so to go at 0%. 

If you think you can pay £1500 a month to settle the debt, maybe then carry on putting the same amount aside each month in accessible savings, that you can use towards the moving costs, and also useful preparation if you're expecting to take on a more expensive mortgage (a higher value loan if you're hoping to move to a more expensive home, and/or might have to pay a higher interest rate.