Credit card or mortgage?

[Ihatesandwiches]

I've been through my bills as money saving expert suggests. I've reduced my utility bills and my broad band. I'm planning on attacking house and car insurance next week (working tomorrow). Over the weekend I'm going to go on the phone and wait for O2 to finally engage. But the big question is - which first? Apply for a 0% credit card and swap my existing credit? 2 years and the debt would be paid off. Or phone and alter my mortgage so the payments are lower?

Where are your existing debts?

I normally say tackle the highest interest rates first, but it also depends on the amounts of the debts. If you have £5000 credit card debt on a card with 20% APR then you can save yourself £1000 per year by sorting out a swap to a 0% deal. However, if you have allowed your mortgage to fall off a fixed rate deal onto the bank's SVR then you might be paying 5% on £100,000 and switching to a new deal at 2% could save you £3000 per year even though the interest rate difference is much less dramatic. So calculate what the saving will be. You are sensible not to do both at the same time because alarm bells will ring in credit reference agencies if you put in too many applications

Do watch out for product fees and take them into account when weighing up your options.

Well done on getting these sorted.

It takes 5 mins online to get an interest free card, doesn’t need to be either or. Don’t be tempted to put cc debt on your mortgage, the repayment will be less but for a very long time.