Overpay mortgage or pay off 0% credit cards

Charlie747

Hi everyone, I can't decide what to do for the best.

I'm considering overpaying the mortgage on a monthly basis, but we also have about £30k on credit card debt between us that I want to clear.

The credit card debt is on a 0% basis but obviously whenever that offer period runs out, we have to balance transfer to another card, so every year or two we do a huge swap around between the 5 cards and it tends to cost us a fee of between 3% and 5% to transfer all the balances again.

Would we be better off paying minimum payments on all the credit cards and concentrating all the spare monthly cash on overpaying the mortgage? I get the feeling this would be the cheaper way of doing things in the long run but I don't know how to work it out.

I can't decide if it's daft to concentrate on paying £30k off all the credit cards which create a minimal fee, or if it's better to chunk that off the mortgage.... Please help! Thank you x

born_again

Pay off the CC debt.
Getting balance transfer is not guaranteed. So if CC's pick up on the amount of debt & not going down, they may well dry up. Then you are paying sky high rates.

Even ML says that any balance transfer, you should be aiming to pay off in the period of offer.

Hoenir

Charlie747 said:

The credit card debt is on a 0% basis but obviously whenever that offer period runs out, we have to balance transfer to another card,

You need to start to formulate a plan. The music will stop one day and you'll be left without a chair. Expensive borrowing would soon erode any short term gains now. 

Mark_d

Juggling the 0% cards might be a cheap method of short term borrowing but as you say, it is not as cheap as it sounds because you have to pay balance transfer fees.  Additionally, it takes time and effort to keep this cheap borrowing going...and if you get hit with any fees then you've lost all benefit gained from juggling these cards.

I would suggest a simpler strategy and pay off the 0% cards.  Then you could use a cashback/rewards credit card which you pay off in full each month by direct debit.

Brie

Given the massively higher rates possible on the CCs paying them down as much as possible is the better option.  Look at the actual cards you have and try to get rid of one that is from the same banking group as another.  This way you still have the option to 0% BT between the ones that remain.  And by get rid I mean, pay off and then close the account.  This will make you a better risk for both your next mortgage renewal as well as possibly opening up more BT offers.  Likewise, decide if you want to have a number of cards with small credit limits or just one or two with high limits.  And start lowering the limits as the cards get paid down.   

Veteransaver

What is the interest rate on the mortgage? Probably a decent strategy is to save into a decent instant access account so that you can clear the CCs when the 0% period ends.