To think savings do not count if I have credit card debt?

[ByPearlUser]

I have around £2k in savings but I also have about £3k on credit cards. So in reality, does that mean I don't really have savings at all?
Part of me thinks I should use the savings to clear the debt but then I'm also worried about having no buffer left.

AIBU to think the savings don't really count in this situation?

You clear the debt asap and use the credit card for any emergency buffer. The credit card is completely cancelling out the savings.

If it makes you feel better (and I do understand the psychology of having £2k in the bank), pay off £1k to start with maybe?

If the credit card debt is increasing through interest, your savings are not savings at all.

Chances are you are paying more interest than you are earning so paying off the credit card makes sense. You can then use the card as a buffer if needed

Pay off the card. If you’re paying interest you’re losing money. Once the cards paid off you can save again. You don’t have a buffer you just have increasing interest.

I feel like if it’s interest free and you’re chipping away at it then it’s fine to have. I like having some easy to withdraw savings. If it’s not interest free then transfer it straight away.

It depends totally on what you are measuring, and other circumstances.

If you are measuring net worth then yes, net worth would be negative one thousand (plus other assets such as equity if you own property, or value of a car, or jewellery etc).

If however you were measuring liquid assets (e.g. in case of an emergency buffer) then you’re doing well with £2k in liquid assets.

If your credit card is on 0% and your saving getting 5% then you’d be doing well and it would be daft to pay the credit card off. Equally, if the credit card is at 22% then pay it off.

There is no “one size fits all” answer.

We keep spreadsheets of our finances and debt obviously cancels out savings. It's still better to have the savings and debt than just the debt so think of it that way but Martin Lewis would tell you to compare interest rates. You're more likely paying more interest on the debt than your getting on your savings in which case it would be more efficient to pay off the debt with your savings and then build up your pot again.

It depends entirely on if the credit card is interest free or not. If not, could you transfer the debt to one which is?

Assuming the debt isn't 0%/very low interest...

Keep £1k as an emergency fund.

Pay the rest of the credit card. Then resolve not to use the card any more and make a plan to pay down the rest of the debt asap.

Look up Dave Ramsay for more advice on this.

Keep £1k as an emergency fund so you don’t keep using your credit card then throw everything at paying off the credit card balance.