Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[JamesV6CDX]

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?  

[Kevin Wood]

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

[JamesV6CDX]

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

[ians]

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?

[JamesV6CDX]

How about a low interest loan, while continuing to build on the savings?

[bob.dent]

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

In that case James I would consider 50-50. Pay half and keep half.

[Jimbob]

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  

[jereboam]

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  

Absolutely! I've been doing that for years (apart from the "Just dont break it up" bit).

[Entwood]

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 ..

[Markjay]

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.

[Martin_1962]

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

[Martin_1962]

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

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

[Martin_1962]

Don't get into debt or you will spend the next 20 years paying it off

[ians]

..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 )

[Marks DTM Calib]

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  

So, you need to be budgeting a monthly amount to cover the debt!