Am I doing the right thing re: credit card debt?

[2000lightyearsaway]

Hi Guys
Just wanted to run this past use to see if I'm being sensible or not.
I have £3420.85 of credit card debt on a 0% credit card for the next 22 months. I'm not overly concerned about it.

I make about £1200 a month after tax give or take. I budget £450 of savings. £200 goes in to a help to buy ISA, £250 goes in to premium bonds. I budget £500 a month to live on. I know it doesn't seem much but I live at home giving my DM some keep although I'm there very rarely because I travel extensively for work and my employer cover my accommodation and food while I'm away. I'm at home with dm roughly 6 days a month but sometimes that could be 10 days.

My car is company and the only thing I have to cover is non business fuel. my fuel is paid with a fuel card and is deducted from my salary hence around £1200.

I aim to pay £200 off my credit card a month plus anything left over at the end of the month so it should be paid off in good time and gives me a few months if I can't make my budgeted amount the odd time.

My question is, should I be putting more money towards the credit card debt or am I ok saving saying as it's 0% and nowhere near needing paid off and I have a plan to do it?

Sorry it's so long winded but I wanted to give the full picture so the numbers make sense. I know its probably a stupid question but I doubt myself alot. Cheers

Definitely better to be earning on savings than paying of 0% debt. Check the moneysavingexpert guide on the best way to save. Sometimes you can get a normal bank account with a 5% interest paid on balances up to £2500 rather than putting away in a 1% savings account.

450
200
250
500

Is 1400. Plus 200 to pay credit card is 1600
You have 1200

If the credit card is truly interest free you should pay enough so that it's down to zero balance when the interest free period expires and invest the rest.

If you're young some of that money should be going into stocks. Perhaps that's what you're ISA is invested in.

Do you have sufficient cushion to cope with the "unexpected" happening? (is that what the savings are for?)

The only worry I see with your plan is that circumstances mean that you can't make the payments you'd intended to, in which case you will be kicking yourself! But as it stands, you will build up enough money in savings to pay off the credit card debt anyway - as long as they are not earmarked for something else.

450 = premium bonds 250 and buy to let ISA 200

Elide- the £450 in savings broke down into the £250 and £200 on ISA and premium bonds.
Actually the OP has £950 (+ £200 to pay off credit cards)

If it is interest free I would pay the minimum payment at get a monthly saver to put the money in and then pay it off in one go with the money you’ve saved and earned interest on

Hi Elide, the 450 is the savings and premium bonds :).

Missconductus I am young but I have no clue about stocks and I've been researching but I just don't feel confident with it.

Redskylastnight I don't have too much of a cushion. The savings in the long run are to buy a house but I wouldn't be upset if I had to dip in from time to time.

Changenameday thats a really good idea! I will look into that

Thanks for the feedback guys :)

It's fine. If you needed to pay the debt off sooner than the end of the 0% period, you could use the premium bonds savings instead.

Do you pay into a pension? Payments you make now are more valuable than payments you will make later...

2000 the best option for a person in your situation is to make a modest, regular investment in stock index or tracker funds:

Vanguard Index Tracker Funds

They buy and hold a broad basket of stocks and charge extremely low fees. Stocks in the long run return more than inflation, something that is not always true with interest bearing investments. Keep researching you options.

This website has some good basic information on getting started with stocks and why it makes sense to.

How to Invest

Ooops sorry

How much do you already have in premium bonds? I would limit that to around 3 months of expenses. Then I would stop and put that money towards the credit card.

Risk seems to be the thing you are missing from your calculations - you have a job now but what happens if that situation changes, paying off the credit card in time may then become a problem.

Nosqurilles, I pay 4% of my salary pre tax which works out at about £70 a month plus employers contributions (my take home is so low because the car is a benefit in kind and I wasn't paying on it for 6 months cause my work effed up so I'm now paying double).

MissConduct Thankyou I will look into those resources :)

nannynick yeah I get were your coming from, I'm of the thought that if that happened then I would put as much of the savings towards it as I could to pay it down. In premium bonds I have £900. That's a thought. Thank-you for your thoughts :)