Omega Owners Forum
Chat Area => General Discussion Area => Topic started by: JamesV6CDX on 20 June 2008, 13:13:40
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Just wondering what anyone would do, in this scenario.
You are in debt by a few thousand pounds across a couple of credit cards. However, you have enough money in another account to pretty much pay it off outright.
Do you pay it off and be skint, or do you pay gradually and keep the money aside? ::)
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At the interest rates credit cards charge it's a no-brainer. ::)
If unexpected expenses occur, there's always the credit cards, but why be paying them through the nose when you don't have to?
Kevin
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At the interest rates credit cards charge it's a no-brainer. ::)
If unexpected expenses occur, there's always the credit cards, but why be paying them through the nose when you don't have to?
Kevin
Ok, a twist - the credit card's interest free for 12 months :D
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I guess it depends what 'skint' really means - you need to buy food etc, but maybe the plasma screen can wait..
As Kevin said given that you will still have the credit cards available for any unplanned expense, I would wack the money into paying off the cc debt - you can think of it as a 'saving' account paying (or rather saving you) a huge rate of interest (and tax free too).
Alternatively explore another card with an interest free deal?
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How about a low interest loan, while continuing to build on the savings?
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At the interest rates credit cards charge it's a no-brainer. ::)
If unexpected expenses occur, there's always the credit cards, but why be paying them through the nose when you don't have to?
Kevin
Ok, a twist - the credit card's interest free for 12 months :D
In that case James I would consider 50-50. Pay half and keep half. :y
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It;s not uncommon to get a interest free credit card deal,
Max it out, and put the money in a high interest account / isa
Make your min payments, pay it all off and enjoy the profit after a year.
Just dont break it up :y
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It;s not uncommon to get a interest free credit card deal,
Max it out, and put the money in a high interest account / isa
Make your min payments, pay it all off and enjoy the profit after a year.
Just dont break it up :y
Absolutely! I've been doing that for years (apart from the "Just dont break it up" bit).
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How about a low interest loan, while continuing to build on the savings?
Problem is ... nearly every loan costs more than the interest on savings .. so you are losing money directly, and the savings are worth less due to inflation - an indirect loss.
A zero interest account CAN be useful .. but it takes an awful lot of self discipline not to actualy use it, and end up owing even more when the interest free period runs out, then the bills rocket.
IF, big IF, you can get to the point where you have no cards, or you pay your card off in full each month, and put any spare or extra money into a savings account, then you are giving the banks the least amount .. so you must, by definition, have more .. :)
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One more things to consider... if you owe money on your credit card, and you make the regular re-payments without a fault, you are building-up a good credit records it will be easier for you to get a loan or more credit in the future.
If you pay everything up front you do not get credit history and may be declined a loan or credit in the future... this may sound odd to the uninitiated, but the logic behind it is that future lenders will want to see is that you can be trusted with long-term loans and that you repay them back over a long period of time without fault.
But you need to make sure that you are never late on any re-payment.
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Just wondering what anyone would do, in this scenario.
You are in debt by a few thousand pounds across a couple of credit cards. However, you have enough money in another account to pretty much pay it off outright.
Do you pay it off and be skint, or do you pay gradually and keep the money aside? ::)
Pay them off and hide the credit cards
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At the interest rates credit cards charge it's a no-brainer. ::)
If unexpected expenses occur, there's always the credit cards, but why be paying them through the nose when you don't have to?
Kevin
Ok, a twist - the credit card's interest free for 12 months :D
DO NOT pay this one off - as it is earning you money - use it to the limit of IFC while you put the money to pay it off into a high interest account
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Don't get into debt or you will spend the next 20 years paying it off :'(
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..and be careful about using the card for buying stuff if the interest free bit was for a balance transfer, as that will immediately break it up.
But otherwise its a no brainer to put the cash in the best savings possible. (but don't spend it ;))
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Which ever scenario you follow you need to ensure that in 12 months time you either
1) Have saved enough cash to clear the credit card balance
2) Have saved enough money to replace that taken from the account.
This is to ensure you do NOT take a backward step from a personal finance perspective :y
So, you need to be budgeting a monthly amount to cover the debt!
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Just wondering what anyone would do, in this scenario.
You are in debt by a few thousand pounds across a couple of credit cards. However, you have enough money in another account to pretty much pay it off outright.
Do you pay it off and be skint, or do you pay gradually and keep the money aside? ::)
Pay them off and cut the card up. Its better to have 0 than own a few grand in my opinion. But thats just my angle on things. :y
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..and be careful about using the card for buying stuff if the interest free bit was for a balance transfer, as that will immediately break it up.
But otherwise its a no brainer to put the cash in the best savings possible. (but don't spend it ;))
Yeah! you've got to be very careful, because if you buy anything on the interest free card, your monthly payments increase, but they go towards the interest free part of your balance. So as time goes on, the proportion of interest bearing to interest free balance rises, which means that you are getting more interest added each month.
The trick is keep the balance moving - when your 12 months is up, find another interest free offer, and shift the balance there. If you are a bad money manager (like me) this means that the old credit card is now available for you to run yourself into even more debt. If you are sensible, just close it.
By the way, here's a tip I got from my bank manager (honestly): don't just "not use" the old card, cut it up, send it back and cancel the account. This means that you can apply to that same credit card company after a year if they come up with a good new offer. It seems that there aren't as many credit card companies as there are cards, so you will not be able to transfer a balance to a new card if it's managed by the same company as the card you are transferring from.
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Just wondering what anyone would do, in this scenario.
You are in debt by a few thousand pounds across a couple of credit cards. However, you have enough money in another account to pretty much pay it off outright.
Do you pay it off and be skint, or do you pay gradually and keep the money aside? ::)
Pay them off and cut the card up. Its better to have 0 than own a few grand in my opinion. But thats just my angle on things. :y
Typo!! Would be great to 'own' a few grand!! :y :y Should read owe ::)
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If it's interest free then save the money and pay minimum payment, always ensuring that you have enough to pay the full balance when needed. But don't spend anything unless new purchases are interest free for the same period of time!!!
I've just cleared all of our cards with a re-mortgage... I know that this isn't the best way to do things but we just weren't making any headway at all with them! The saving in payments and interest is well over £500/month as we both had a considerable debt when we got together!
Now we'll be using just one card for everything and paying it in full every month... About time the banks helped us instead of just creaming money off me, the thieving gits... >:( >:( >:( >:(
OOPS... Sorry, started ranting there!! ;D ;D ;D ;D
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if they're interest free for 12 months i wouldnt bother paying them off til last minute, then i'd get rid of the cards
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If its 12 mths interest free then best idea set up if online account a payment basis every month with them so long as it meets the minimum, dont use the card just let it go gradually down (will be slow) then at end of 12 mths they will notify you of interest free is about to end, providing you still got money in the bank pay it off then, i moved money/debts around many times years ago to get int free credit cards when i was going through a bad patch, but now they charge approx 3% of the transfer didnt do that at one time, even then it aint bad. ::)
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If its 12 mths interest free then best idea set up if online account a payment basis every month with them so long as it meets the minimum, dont use the card just let it go gradually down (will be slow) then at end of 12 mths they will notify you of interest free is about to end, providing you still got money in the bank pay it off then, i moved money/debts around many times years ago to get int free credit cards when i was going through a bad patch, but now they charge approx 3% of the transfer didnt do that at one time, even then it aint bad. ::)
sounds quite a good idea. still rather pay it all off meself! Hate the thought of debt. But this sounds a good idea too :y
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it needs discipline (not to spend the money) and good organisation.
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Personally i would pay off the cards and then use the money you were spending on repayment to populate your savings account again.
You will then clear the debt, improve your credit rating because of early repayment and it puts you in a strong position if/when goes pear shaped in the economy.
That was my plan when i went self employed, i feel a lot better now only have the mortgage, when is in the bank after that is paid is pretty much mine......aside from the gas...electricity...council tax...well you get my point :y
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Personally i would pay off the cards and then use the money you were spending on repayment to populate your savings account again.
You will then clear the debt, improve your credit rating because of early repayment and it puts you in a strong position if/when goes pear shaped in the economy.
That was my plan when i went self employed, i feel a lot better now only have the mortgage, when is in the bank after that is paid is pretty much mine......aside from the gas...electricity...council tax...well you get my point :y
Me too Jay! Gotta be the best way ;)
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Having just paid all our cards in full today I must say I'm actually looking forward to the next round of statements!! ;D ;D ;D
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paid all my cards/overdraft in full last month (5 figure sum),the feeling of being debt free after all these years is brilliant.all i need now is a job.
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Surf the cards across 0% balance transfers
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Surf the cards across 0% balance transfers
Me thinks you will be Lucky if you find one they all cottoned on the Bal Trfr thing (Credit card Companys) so its 3% usually now with em all as they probably made nothing out of you if used correctly !! :)
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Don't do credit cards bloody things should never have been invented burn the lot of them... if you can't afford it don't have it :y