Clear debt quickly, or slow and steady?

[Upsider]

I’ve got £5000 of credit card debt that I will finally be in a position to make monthly payments on. It’s currently on a 0% card.

Finances are still tight as we are paying childcare, so I’m undecided whether to spread the cost across the whole term (30 months) or try to clear it sooner, which might leave us tight or going without things each month.

Can anyone offer any wisdom please? We will need to remortgage in 18 months time so wondering whether it’ll go against us.

Are you planning to apply for a mortgage or another loan in this 30 month period? If so, clear it as quickly as possible. You’re better without any debt when applying for a mortgage. If not, clear it over the 30 month period but make sure it definitely is cleared by the end of the period, that you don’t pay less than 1/30 a month with a view to making it up some other month for example.

From the mortgage lender’s perspective they will obviously consider your overall debt and credit worthiness but they are going to consider significantly your affordability - and here I think having everything pinched with too many outgoing payments will possibly not look that good in terms of affordability. this is without knowing whether you’re thinking of taking out additional borrowing when remortgaging.

the scenario where I would suggest clearing it all off on chunks is if you say this would clear the debt before you remortgage and you’re able to tell the lender you have 0 debt and 0 monthly payments. If that’s possible and doable and won’t hurt other things then why not

I would put the overpayments into a savings account. Then use the 30 months to reduce this steadily, knowing you are building up savings should you need them or paying the balance when required.

Not sure what overpayments @Threetulips is referring to by the way when I advised.

Yes we will be remortgaging at the end of our fixed term, next November. Only reason I’m considering the slow and steady approach is because the last few years have been a balancing act between accounts, and it would be nice to breathe a little. I do want the debt gone though. Saving the overpayment might be a good option. Thank you!

Sorry I will add - you are currently paying £166 a month - this amount goes down as the debt goes down

5000 - 166 -165-163-160 etc

I would set up a standing order to pay the debt at a continuous £170 per month rather than the reduced direct debit payments.