Pay off credit card or keep savings?

[mosschops30]

I have a bit of a dilemma and just dont know what is the right thing to do.
I have £900 in my ISA which i am keeping for a holiday next year for me and dh.
I also have £900 on my 0% credit card, which emds in july.

So i normally have about £300 spare per month to pay off my card, but for the next two months i have to pay off this years holiday balance which leaves me no spare money until june.

My options are pay the card off in full, pay off holiday then start putting back into the isa in june.
Leave the £900 in the isa, pay holiday balance and transfer balance of card onto a new 0%.
Or use some of the ISA money to pay holiday balance, clear card by july out of wages and then start paying back into ISA

What would you all do?

Bump, no one wants to talk to me on either thread today

Pay off the card.

In one full amount out of the ISA or over the next 3 months out of my wage

Do whichever one costs you the least money or makes you the most money. Transferring card balances to take advantage of 0% deals usually comes at a price - a percentage of the balance. So take that into account compared with the interest you will earn on your ISA and see which one costs less.

Savings rates are too low to privilege savings over debts. Debts will cost you more than you will earn, so that is always what you should clear first.

This tax year (11/12) doesn't end for a year, so it;s not as though you're missing a window (which might actually make it worthwhile to save over debts).

agree with chill

Ok but its not in my ISA to gain any money, its just sitting there for my next holiday.
Similarly the credit card debt is costing me nothing either.

I just dont know what the best option is.

The thing that bothers me is that i like to have money somewhere should i need it, if i clear the card i have nothing other thamy wage

Definitely pay off the card- the interest rate will be higher than any savings rate atm.
Personally I wouldn't go on holiday until id built up some savings, but that's your decision!

Pay your holiday balance for this year and, come July when the 0% expires, use your ISA to pay off the outstanding balance on the credit card. (You don't mention any loans or overdrafts so this assumes you don't have any) Then take out a new 2011/12 ISA and start saving like mad a) to give you a 'rainy day fund' and b) for next year's holiday. Don't use your credit card in the meantime, unless you are prepared to pay off the balance in full each month.

what rate will the interest be on the card after the 0% finishes? If it's c 20%, it will cost you about £15 a month in interest each month you don't clear it; so if you keep your ISA for emergencies & pay off the card in instalments, it will cost you £30-45 in interest but you'll still have your £900

Why not pay off the credit card and then if you really need money for an unexpected bill, use your credit card?

I agree with Chil1234. Since you are currently not paying interest on the card you can afford to leave the balance. Just make sure you don't put anything else on it before July! Save yoru 300 a month into your ISA and then pay off your card in full when interest is incurred on that. You will still have 600 in your ISA (presuming you save 300 each month as you mention) and with the 300 for July (if you save 300 each month) you will be back to 900 which is what you have now got for your holiday. Then do as Chil say and take out a new ISA which you use for your rainy day fund.

@Snuppleine There's an outstanding balance of £600 on the 2011 holiday, if I'm reading it right. The £900 ISA is to pay for the 2012 holiday. But if the OP can find a spare £300/month to pay off the 2011 holiday balance at the moment there's a good chance they could afford to put something similar into a savings account once the 2011 holiday is settled.

Even if they only save £150/month between July 2011 and Feb 2012, that's over £1000 in the bank, with interest, to spend on the 2012 holiday.

Yes my half of the holiday balance is £600
But i will need to use my spare £300 per month for the next two months to pay that off.
Which leaves me 2 months to clear the £900 which i cant do in two months

I am still none the wiser

I will need to spend on a card between now and july, maybe £200 maximum

Use your spare £300/month to pay for the 2011 holiday. Pay off the £900 credit card with your ISA in July when the 0% expires but keep ISA account open by leaving a token £10 in there. Every month between now and your 2012 holiday booking, save your spare £300/month in the ISA. (By December you will have £1500 saved). Whatever you spend on your card from now on, pay off in full when the bill comes.

Ok so pay off holiday with april and may pay.
Then use june and july pay to clear as much as poss off card.
Use ISA then to lear remaining
Shoukd leave £600 ish in my ISA
And start saving again from august

Is that right? [dumb blonde emoticon]

Slightly different but, yes, I think you've got the idea. :) What you have to avoid at all costs is leaving a balance on the credit card when the 0% expires because it'll wipe out the interest you made on your ISA.