Help me clear my credit card debt

202601creditcards

I have two credit cards:

A Jaja Visa on which I've spent c.£4.5k
A Halifax Mastercard on which I've spent c.£3k

I also have a Vanguard stocks and shares ISA which I used to save £19k for the deposit for my house. The risk level on this is medium and it currently contains c.£750 as I now only add £50 per month into it.

I can spare about £500 a month to clear this debt.

I was thinking of putting this monthly sum into the ISA as a means of building the required amount. 

Would that work or not? Or is there a better day?

eskbanker

Surely putting all your spare money straight towards credit card repayments will be the most cost-effective option, assuming the debts aren't at 0% interest?

202601creditcards

They aren't at 0% interest, no. I thought I could build a decent amount with the ISA.

CliveOfIndia

As above, unless your credit cards have a zero or low rate promotional offer in force, it's almost certain that you'll be paying more interest on them than what you're getting on your savings.

It might be worth looking to see if you can transfer any of the debt on to a 0% Balance Transfer card.  If you can, it means that all payments will reduce the capital, rather than paying off interest.

There's no guarantee you'd be accepted for a BT card, of course, but there's no harm in running a few eligibility checks to give you an idea.

Do remember though, if you did this you still need to go all-out to clear the debt before the promotional rate expires.

If you do get accepted for a BT card but you're not offered a high enough credit limit to transfer all your debt, transfer what you can - you'll still be saving interest overall.

Isthisforreal99

202601creditcards said:

They aren't at 0% interest, no. I thought I could build a decent amount with the ISA.

Ridiculous thought process when you are paying 20% + apr on your credit cards.

CliveOfIndia

202601creditcards said:

I can spare about £500 a month to clear this debt.

You can, if you wish, also head on over to the Debt-Free Wannabe board and post up an SOA.  You may well find that a fresh pair of eyes looking at your budget can identify areas where you can make savings in your expenditure, meaning you'd have more spare cash to throw at the debt.

eskbanker

202601creditcards said:

They aren't at 0% interest, no. I thought I could build a decent amount with the ISA.

You probably could, but it would likely be dwarfed by the interest you'd be paying on the debt - what are the APRs?

grumpy_codger

MSE: 

Pay off debts or save? 

fatbelly

I would do both:

Transfer as much debt as possible to 0%
Pay it down at £500 per month

Could be debt free in 15 months!

enthusiasticsaver

No I would put it straight off the credit card as you are paying interest.