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  • FIRST POST
    • chelseablue
    • By chelseablue 2nd Jul 18, 1:14 PM
    • 2,563Posts
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    chelseablue
    Wipe out savings paying off card?
    • #1
    • 2nd Jul 18, 1:14 PM
    Wipe out savings paying off card? 2nd Jul 18 at 1:14 PM
    Not sure what the best course of action is.

    We had the wonderful idea (!) of getting married and going to Australia on holiday in the same year.

    The wedding was 2 weeks ago and we saved up for it and was fully paid for cash.

    Because we were using our savings for the wedding I put the flights to Australia on my credit card.

    Consequently my Barclaycard balance is now 8,000.

    I have 2 other credit cards that are 0% until 2020:
    Sainsburys Bank (Balance is 476 with a credit limit of 6,000)
    Lloyds (Balance is 2,200 and credit limit is 4,500)

    I can do a 0% BT to the above 2 cards which would pay off Barclaycard

    We have 4,000 left in savings.

    Should I just send this 4,000 to Barclaycard and be left with zero savings?
    Was keeping it to use for spending money in Australia but not sure what to do now.
    Mortgage starting balance 231,000
    Mortgage after Year 1 225,000
    Mortgage after Year 2 218,000
Page 1
  • National Debtline
    • #2
    • 2nd Jul 18, 3:43 PM
    • #2
    • 2nd Jul 18, 3:43 PM
    Hi Chelseablue,


    First of all, congratulations on your recent nuptials.


    There will be a lot of different opinions on this, but ultimately you need to do what is right for you. If you used the savings to pay towards the card, the first issue may be - what would you do for spending money on the holiday - would that go on a credit card instead? That could be harder to monitor, plus you may be subject to fees for using the card abroad. Or, do you mean that you are considering cancelling the holiday all together?


    If the payments to the debts are up to date, and you can switch them to 0% interest, then you could overpay when you return and potentially consider cutting up the cards so no more debt builds up - as this can be a very slippery slope. I think it would be a different situation if your savings would clear your debts completely and/ or if you had no other specific need for them, but that isn't the case here.


    If you can clear the debts before the interest free period ends, then you may not gain much financially by using your savings to clear the debts at the moment (but I understand it can sometimes feel pressuring even when everything is manageable). Good luck,


    Laura
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • chelseablue
    • By chelseablue 2nd Jul 18, 4:31 PM
    • 2,563 Posts
    • 2,994 Thanks
    chelseablue
    • #3
    • 2nd Jul 18, 4:31 PM
    • #3
    • 2nd Jul 18, 4:31 PM
    I spoke to Sainsburys bank and I can transfer up to 5,500 to them at 0% until August 2020.

    We can afford to repay 500 per month so will be repaid way before the 0% ends
    Mortgage starting balance 231,000
    Mortgage after Year 1 225,000
    Mortgage after Year 2 218,000
    • saajan_12
    • By saajan_12 3rd Jul 18, 5:28 PM
    • 1,430 Posts
    • 1,044 Thanks
    saajan_12
    • #4
    • 3rd Jul 18, 5:28 PM
    • #4
    • 3rd Jul 18, 5:28 PM
    I would start with balance transferring to the 0% cards so you're not at risk of paying interest unnecessarily while you decide.
    Sounds like there would be a small amount <500 left on your Barclaycard, which I would pay off from savings, so you know its cleared and cut up the card.

    Then you're left with ~3.5k in savings and ~10k across two 0% cards, so atleast you're not paying interest.

    Then make a budget of what you'll allow yourself to spend in Australia, and take only that (perhaps split out the cash in envelopes / travellers cheques so you only spend part each week / day, and pace yourself). If you have any extra from your 3.5k less Australia budget, you can pay that off before you fly, and when you return, if you have saved even more then pay that off too.
    • Debtfreeforever
    • By Debtfreeforever 3rd Jul 18, 10:13 PM
    • 61 Posts
    • 72 Thanks
    Debtfreeforever
    • #5
    • 3rd Jul 18, 10:13 PM
    • #5
    • 3rd Jul 18, 10:13 PM
    Would keep an emergency budget, only you know how much (to pay for regular things, insurance etc and anything you think may come up) and reat towards card that runs or fastest/has the most amount
    • enthusiasticsaver
    • By enthusiasticsaver 3rd Jul 18, 11:41 PM
    • 7,072 Posts
    • 15,314 Thanks
    enthusiasticsaver
    • #6
    • 3rd Jul 18, 11:41 PM
    • #6
    • 3rd Jul 18, 11:41 PM
    I would not clear all your savings but at more than 10k on credit cards I would certainly use some of them to pay towards the cards. You have 6 months to replace the savings before Australia. Did it really cost 8k?
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • chelseablue
    • By chelseablue 4th Jul 18, 11:15 AM
    • 2,563 Posts
    • 2,994 Thanks
    chelseablue
    • #7
    • 4th Jul 18, 11:15 AM
    • #7
    • 4th Jul 18, 11:15 AM
    The flights were 7k for all 3 of us. Knew going in Christmas holidays would be expensive but didn't realise how much.

    The price includes all our internal flights as well.

    I had another idea last night, instead of paying off 500 a month and saving 500, from now until Chrisrmas pay the whole 1,000 we have spare a month off the debt.

    That way by the end of the year the debt will be down to 'only' 4,000
    Mortgage starting balance 231,000
    Mortgage after Year 1 225,000
    Mortgage after Year 2 218,000
    • datlex
    • By datlex 8th Jul 18, 11:06 PM
    • 1,767 Posts
    • 1,668 Thanks
    datlex
    • #8
    • 8th Jul 18, 11:06 PM
    • #8
    • 8th Jul 18, 11:06 PM
    Personally I would pay off the Lloyds one of 2200 and then use the rest for spending money. That way you have cleared a debt and you don't miss out.
    • middleclassbutpoor
    • By middleclassbutpoor 8th Jul 18, 11:45 PM
    • 257 Posts
    • 217 Thanks
    middleclassbutpoor
    • #9
    • 8th Jul 18, 11:45 PM
    • #9
    • 8th Jul 18, 11:45 PM
    Here is how I would do it in your situation.

    Your circustances are that you have approx 10,600 on credit cards currently.

    You have a budget of 1000 per month which could be used to repay the debt. Assuming this includes July, you have 6 payments up to and including decembers payment. (6000)

    You have 4,000 in savings.

    I would use the 4k savings to pay off the debt - clear Lloyds and sainsbury card with 1,300 remaining off the barclaycard (reducing this to 6,700).

    I would close your sainsburys and lloyds card down.

    Use the 6k monthly payments and focus your efforts on the barclaycard.

    I would then revisit my plan in say October.

    Your barclaycard will have approx 3800 inc interest accrued.

    I would then start to look more closely at your budget and what you will need. Consider taking smaller amount of cash and continue to make overpayments on the basis you know you may need to use a credit card to supplement your spending on things - such as experiences or evening meals for example. This way you could be down at say I will get my card down further before I go but take 1000 cash - just make reduce your payments between Oct and Dec to create this amount in your budget.

    Only when you know what you need to spend, you can you then decide what you should do with Oct- Dec's payments.

    On a side note....

    4K seems a lot of money to take on holiday - so I would look to try and work out what costs are likely to be and create a proper budget.

    Have you looked to validate the need to take 4k?
    Last edited by middleclassbutpoor; 08-07-2018 at 11:49 PM.
    • chelseablue
    • By chelseablue 9th Jul 18, 10:26 AM
    • 2,563 Posts
    • 2,994 Thanks
    chelseablue
    Thank you all

    What I have done so far is:

    Did a balance transfer from Barclaycard to Lloyds to move some of it to 0%
    Then I used savings to pay another 3,000 off of Barclaycard.
    Paid off the Sainsbury's card (balance is now 0 with a 6k limit)

    Balances are now Lloyds 4,400 and 4,000 Barclaycard.

    I now have 2 choices; do I close the Sainsbury's card or transfer the 4,000 from Barclaycard to it?
    Sainsbury's is 0%

    I agree 4,000 is a lot of spending money for a holiday! Included in that figure is accommodation costs.
    Don't really want to just stay in expensive hotels, was looking at air b&b and some places we can stay in have their own kitchen so wouldn't have to eat out every night
    Mortgage starting balance 231,000
    Mortgage after Year 1 225,000
    Mortgage after Year 2 218,000
    • MallyGirl
    • By MallyGirl 9th Jul 18, 11:35 AM
    • 2,956 Posts
    • 7,956 Thanks
    MallyGirl
    If you can get the BCD debt onto Sains at 0% I would do that - and then close BCD account.
    • chelseablue
    • By chelseablue 11th Jul 18, 10:50 AM
    • 2,563 Posts
    • 2,994 Thanks
    chelseablue
    Bit confused, I just did the snowball calculator and it says I should concentrate on paying off the Lloyds card first.

    Even though Lloyds is 0% and Barclaycard isn't. I was going to clear BC first as I'm paying interest on it, and then move onto Lloyds
    Mortgage starting balance 231,000
    Mortgage after Year 1 225,000
    Mortgage after Year 2 218,000
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