Question for talkinpeace please.

[Mooycow]

You kindly helped me with a credit card debt , thank you very much for your no nonsense helpful approach. I have another question for you .
We are paying £150 over the monthly repayment for our mortgage . Is this a good idea, would we be better off paying that off the credit card , which is a low % card ? Thank you in advance x

I am sure talkinpeace will have some advice for you... whilst we wait, can I chip in my mine?

Credit card is unsecured debt, it is often at high interest and when it is on low interest it is only low when you meet the conditions of the offer.

I would pay back unsecured debt BEFORE overpaying on the mortgage. This reduces risk of being exposed to high interest and fees which a credit card may impose if you were to accidentally miss a payment.

I would also build up an emergency fund so that you never resorted to credit card debt again.

Then you will be in a great position to overpay on your mortgage and within a number of years you will have a paid for home.

nanny is right
You need to pay down the highest interest rate first

1. Overdraft
2. random loans like payday
3. credit cards
4. unsecured loans
5. secured loans (like cars and houses)

if you whump that £150 against the credit card for a short time you'll save more interest
then when all minor borrowing is clear THEN you whump the mrtgage

Loving the whumping.

Whump makes a good sound when the balance on an item of borrowing hits zero

If credit card was 0% would you still whump it before mortgage? In my view you would, as it is unsecured debt.

Suppose it is like saying, if you could borrow £450k on a 0% credit card, would you do that rather than borrow £450k on a 4% mortgage?

Or is that an unfair comparison?

nanny
Yes, even a 0% card should be whumped

• firstly because 0% never lasts forever and the rates are horrific when it ends
• secondly because learning to change the spending habits is really important

If you are borrowing a LOT of money you aim to secure it against the asset to get the best rate

nanny if you truly could get a 0% card that stays 0% for 25 years and covers a house then that would beat the mortgage- if you defaulted you would not be repossessed as it's unsecured.
Good luck hunting for that card though...

No such card exists or ever will. What I was trying to get at was that when we borrow money there is risk. When we borrow at 0% we are lulled in to a false sense of security... when in fact the risk is probably greater as it won't be 0% forever and will ultimately be higher percentage than the mortgage and is an unsecured debt.

Fair point.