What to do with £3000

[ChloePD]

We were lucky to get £3000 cash as a settlement. I'm not great with money and would appreciate some advice on what to do with it.

We have two credit cards with a combined debt of about £3600.

We could either pay the majority of the credit card off, or do something more clever with the money that might give us a good return in the future? The credit cards are currently interest free for the next 22 months so not urgent to pay them off and we can afford to pay them off within the next year.

We are ttc so that £3000 would be handy in the next year or so for the baby.

So my question is:

Do we pay off the credit cards and open a savings account and pay into it monthly for the baby
Do we put the £3000 into a savings account and keep it for a baby and pay off the credit card monthly
Or do we invest the £3000 (I know NOTHING about investments) and pay off the credit cards monthly and then get that £3000 back when we need it for baby?

Sorry if it all sounds daft!

I’d pay off CC debt, even though it is interest-free and get that cleared. Once it has, you can then start saving for your family.

Pay off the credit card

Savings rates are abysmally low right now, so even if you put the £3000 away for two years, at current rates of 1.5% you'd only get about £90 in interest at the end. But hey, £90 is £90!

Or, you could stick it in premium bonds for two years and hope to win more than that (although the odds are that you'd probably win nothing or less than £90).

If you do either of these though you MUST pay off your credit card bill before it begins to attract interest, so if you have any doubts about your ability to do that I'd say just pay it off now and start saving in a Regular monthly savings account instead.

Premium Bonds and meanwhile pay down your CC.

If you reach the end of the interest free period cash in P Bonds to pay off CC.

Interest rates are pathetic, but you might do OK on Bonds and you never know you might do really well! The money can’t be lost and you
Might as well be in it to win it until you need it.

But do pay the CC down in the meantime.

Pay off your credit cards . Interest in £3000 isn’t worth very much