Should I pay off my full balance?

Cherryp1e

I could pay off my credit card balance from my savings and then pay myself back at the same rate, finishing six months earlier, thus saving me £600 if making a £100 monthly payment.

Obviously there are going to be drawbacks, too:

-  It will reduce my savings and, if I continue to use my credit card, it will mean making two payments each month. 

- It won't actually lower my monthly payments.  I take paying myself back very seriously.

- Without increasing my limit, I don't have enough to cover emergencies. If I pay it off in full I will have the card for emergencies but then see the first point above.

-  Paying it off in full will take approximately 12% of my savings, so I would have enough for emergencies - but I've recently halved my salary and my son currently needs some financial support.

I'm tying myself up in knots, really.  Any thoughts welcome. 

Brie

If you have savings and paying interest on a credit card balance it makes sense to pay that off and stop paying out an excess amount. 

grumbler

Cherryp1e said:

I could pay off my credit card balance from my savings and then pay myself back at the same rate, finishing six months earlier, thus saving me £600 if making a £100 monthly payment.

Obviously there are going to be drawbacks, too:

-  It will reduce my savings and, if I continue to use my credit card, it will mean making two payments each month. 

- It won't actually lower my monthly payments.  I take paying myself back very seriously.

- Without increasing my limit, I don't have enough to cover emergencies. If I pay it off in full I will have the card for emergencies but then see the first point above.

-  Paying it off in full will take approximately 12% of my savings, so I would have enough for emergencies - but I've recently halved my salary and my son currently needs some financial support.

I'm tying myself up in knots, really.  Any thoughts welcome. 

Not sure I understand the options you consider.
MSE article: 

Pay off debts or save? Max your cash - MoneySavingExpert

MEM62

Paying interest on your credit card to maintain an emergency find that may or may not be needed makes no sense.  You are effectively borrowing money at a high interest rate to stick in savings.  Clear the card and replenish your savings.  Use it again if you have an unforeseen expense in the meantime.  You can use what you have saved in interest to boost your savings.   

molerat

Paying interest on borrowing at >20% and receiving interest on savings of likely <5% makes no financial sense.  Your debt is only a small proportion of your savings so paying it off and repaying your savings makes most sense.  I do hope you are not spending on this card with an outstanding balance, that is really nonsensical !

enthusiasticsaver

Cherryp1e said:

I could pay off my credit card balance from my savings and then pay myself back at the same rate, finishing six months earlier, thus saving me £600 if making a £100 monthly payment.

Obviously there are going to be drawbacks, too:

-  It will reduce my savings and, if I continue to use my credit card, it will mean making two payments each month. 

- It won't actually lower my monthly payments.  I take paying myself back very seriously.

- Without increasing my limit, I don't have enough to cover emergencies. If I pay it off in full I will have the card for emergencies but then see the first point above.

-  Paying it off in full will take approximately 12% of my savings, so I would have enough for emergencies - but I've recently halved my salary and my son currently needs some financial support.

I'm tying myself up in knots, really.  Any thoughts welcome. 

If you are paying interest on your credit card it makes no sense to have the money in a savings account paying a lower interest rate instead of paying off the card.  It is always cheaper to borrow your own money. 

I don't really understand your comment about paying yourself back? I assume you mean replenishing your savings but that indicates you think that is more important than clearing your debt on your credit card.  Even if you do not consider that important it is most definitely more expensive.

The question of an EF when you have debt depends really on rates and the likelihood of you needing said EF in the forseeable future. What rate are you paying on your credit card? 

Nasqueron

enthusiasticsaver said:

Cherryp1e said:

I could pay off my credit card balance from my savings and then pay myself back at the same rate, finishing six months earlier, thus saving me £600 if making a £100 monthly payment.

Obviously there are going to be drawbacks, too:

-  It will reduce my savings and, if I continue to use my credit card, it will mean making two payments each month. 

- It won't actually lower my monthly payments.  I take paying myself back very seriously.

- Without increasing my limit, I don't have enough to cover emergencies. If I pay it off in full I will have the card for emergencies but then see the first point above.

-  Paying it off in full will take approximately 12% of my savings, so I would have enough for emergencies - but I've recently halved my salary and my son currently needs some financial support.

I'm tying myself up in knots, really.  Any thoughts welcome. 

If you are paying interest on your credit card it makes no sense to have the money in a savings account paying a lower interest rate instead of paying off the card.  It is always cheaper to borrow your own money. 

I don't really understand your comment about paying yourself back? I assume you mean replenishing your savings but that indicates you think that is more important than clearing your debt on your credit card.  Even if you do not consider that important it is most definitely more expensive.

The question of an EF when you have debt depends really on rates and the likelihood of you needing said EF in the forseeable future. What rate are you paying on your credit card? 

I think the OP means that if (for simplicity's sake) they had £6000 of debt and were paying £500 a month - they would pay the £6000 from savings and "repay" themselves by putting the £500 a month back into the savings so over 12 months they would replenish the savings

enthusiasticsaver

Nasqueron said:

enthusiasticsaver said:

Cherryp1e said:

I could pay off my credit card balance from my savings and then pay myself back at the same rate, finishing six months earlier, thus saving me £600 if making a £100 monthly payment.

Obviously there are going to be drawbacks, too:

-  It will reduce my savings and, if I continue to use my credit card, it will mean making two payments each month. 

- It won't actually lower my monthly payments.  I take paying myself back very seriously.

- Without increasing my limit, I don't have enough to cover emergencies. If I pay it off in full I will have the card for emergencies but then see the first point above.

-  Paying it off in full will take approximately 12% of my savings, so I would have enough for emergencies - but I've recently halved my salary and my son currently needs some financial support.

I'm tying myself up in knots, really.  Any thoughts welcome. 

If you are paying interest on your credit card it makes no sense to have the money in a savings account paying a lower interest rate instead of paying off the card.  It is always cheaper to borrow your own money. 

I don't really understand your comment about paying yourself back? I assume you mean replenishing your savings but that indicates you think that is more important than clearing your debt on your credit card.  Even if you do not consider that important it is most definitely more expensive.

The question of an EF when you have debt depends really on rates and the likelihood of you needing said EF in the forseeable future. What rate are you paying on your credit card? 

I think the OP means that if (for simplicity's sake) they had £6000 of debt and were paying £500 a month - they would pay the £6000 from savings and "repay" themselves by putting the £500 a month back into the savings so over 12 months they would replenish the savings

If that is what they meant then that makes sense. 

Grumpy_chap

Cherryp1e said:

I could pay off my credit card balance from my savings and then pay myself back at the same rate, finishing six months earlier, thus saving me £600 if making a £100 monthly payment.

Saving £600.
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