Savings over paying debt

[Coldemort]

Currently I have 1 months (wages) savings in an emergency fund. Any extra goes to paying off CC debt.
In context, I'm single and live on my own. My take home is just under 2k a month. Essential Bill's, including CC minimum payments, come to around £1,200. I've had a talk with myself this year and have been able to put away around £300 pm.
I've become aware lately that my credit options are becoming slightly restricted (no problem with my credit report, presume it's down to the current climate). For example, I've had a 3k overdraft facility on my bank account since my student days (nearly 20 years ago!) which has just been removed despite me never using it. Think that has bought home how I've always thought 'well I have available credit if I got in shit chreek'. That credit can easily be withdrawn...
Anyway.... approx 9k in CC debt (historic and dont want to get into explanations!) currently on 0% balance transfers but I'm finding them more difficult to find. £1,500 in savings.
Might be a bit coronavirus panic if I had to self isolate (in which case the horse has bolted).
So... should I add to savings or pay off debt?

Pay off debt.

If there's a risk you won't be able to get more credit, then I'd focus on paying off the CC debt whilst it's still on 0%, because if we go into a recession and credit becomes limited, then at the end of your current deal you will be looking at incredibly high rates.

You can try asking for bank to give you an overdraft facility again. I think bank rates for agreed overdrafts are still better than CC.

Don't pay off any cheap debt like student loan debt though, as it makes sense to keep that debt.

Well done for sorting some savings, I'd keep your emergency fund but given what you've said, I'd probably start paying off the CC now. Not an expert though, have you looked on MoneySavingExpert? It's an excellent resource.

We are saving as much as possible to pay off our 0% card and will pay it off the month the 0% ends. Might as well sit in our account and accumulate (piss poor) interest or used as an emergency fund if something blows up. Saves putting the blown up item on a credit card and getting into more debt.

I am in no position to give financial advice though 😂

Thanks for the response :)
I've looked at MSE and it suggests putting all available funds into paying off debt first. But I really wouldn't be comfortable with that. Like I say, my worry is if for any reason beyond my control, credit became unavailable I'd rather have 'real' money.

Unless all your debt is on 0% for a decent period, it makes little sense to have credit card debt and savings.

Pay off debt starting with the debt with the highest interest rate.

Have a look at Martin Lewis money saving expert website for hints and tips.

Go through all your bills (gas, electricity, mobile/broadband etc) and see if switching will save you any money. Also look into moving bank accounts of it will save or make you money.

Ok, so with the advice so far, would I be better paying the £1,500 off debts and not having an emergency fund??

No! Keep the emergency fund. Always. Otherwise you end up taking out more debt when something goes wrong/break. But now you can put that extra money each month into paying off debt - so paying the £300 above the minimum.

If you pay off debt, you can borrow. The longer you have debt which doesn't reduce, the poorer risk you are. Zero percent cards are good if you are actually paying off the debt.

Do that, then save.

Google Dave Ramsey. Although he's v American based he talks a lot of sense. First step is build a baby emergency fund then pay off debt.

Good luck

Can you keep the emergency fund you've got so far, but then instead of adding more, you can put the £300/month into paying off credit cards instead, starting with that with highest interest after.

No interest on savings unless you are rich so get rid of the debt.

Pay off the debt! You'll feel so relieved and free once it's gone, and after you'll be amazed at how quickly your savings build up. I would keep your £1,500 in savings as an emergency fund though so you have a small cushion. All your spare from now on goes to debt.

What are your bills without the cc minimums? There might be some savings there that Mumsnet can help you with.

If debt is at 0% at the moment, save as much as you can so that when the 0% deal finishes and you can't find another one, you can at least pay a chunk off.

I’ve got 2 cards, I’ve got enough in my savings account to pay off 1 and halfway to paying off 2 but won’t be paying off 1 until the 0% ends. If it’s not accruing interest I don’t see the harm in keeping the savings account higher.

In reality I don’t think it makes a difference either way. You won’t be accruing interest as you have a 0% deal and you won’t be gaining much interest if you keep the debt on the card and leave the money in savings.

I think bank rates for agreed overdrafts are still better than CC

Not any more, they're putting all the overdrafts up to 40% APR. You're well rid of the overdraft OP.

As for the credit cards, you just need to keep on with it and you'll get there.

Just saw the MoneySavingExpert update tonight - overdrafts are now hideous as the banks have all just put up their rates.

Your plan sounds sensible Peasfox, works out the same I think, but gives you flexibility.

Best interest rate at the moment, on an open access account, is about 1.4%, maybe 1.3% now. You can get slightly higher if you fix (still less than about 2%) but then you can't access your money as easily. Savings rates are dreadful.

Have you stopped using credit cards? You should draw a line under the debt you have and not add to it. therefore keep some savings so that you can afford your MOT or similar without using credit card.