Debt versus savings

[froidIci]

Everyone knows that saving at 5% whilst servicing debt at 14% with minimum repayment is bonkers.

BUT - what would you do it you had - hypothetically £3k on a 0% credit card and 7k in savings in a bank earning between 5-8%, and you are already servicing the 0% CC with more-than-minimum payments so that it’s due to clear before the 0%.

1. Would you take 3k out of your 7k liquid savings to clear the CC and be done? (No new debt being added).
2. Or would you leave the 7k earning interest And continue unabated with your current practice of paying more-than-minimum designed to clear CC before 0% ends, whilst also continuing to save.

Really keen to know what others would do!

For broader context -

Mortgage being overpaid
Sufficient emergency liquid savings for 6 months
no other CC debt or loans of any kind
2 stable FT jobs
Intention to upsize house and apply for larger mortgage in 2 years

Having a cash buffer is important to me, so I’d continue with the current plan.

In the circumstance you outline, there's no value in paying off the debt unless doing so gives you piece of mind.

As long as the card is paid off before the end of the 0% term and before the mortgage application I would continue as you are.

I would pay it off as debt stresses me out but my partner would keep the money in savings to earn more interest. It depends on your priorities.

I would clear the debt and start afresh as it’s a brand new year. It’s not like you’re earning much in interest on that amount, anyway.

I’d keep overpaying on the 0% card, set a reminder for a month before the 0% term ends and use savings to pay off the balance. Maybe look at how much you would need to up the monthly payments over the remaining term (providing it’s got a long term left and won’t interfere with the mortgage application) to pay off without touching the savings?

It used to be easy to move to another 0% card but the fees to move it along seemed quite high last time I did it.

I hate having debt hanging over me and would be really tempted to pay it off, but realistically the money is better in your pocket while you’re not being changed interest.

15 more payments or £200 a month will clear it before the 18 month 0% period ends.

Mortgage application about 20 months from
now.

So yes definitely cleared 5 months before mortgage application but I’m highly likely to chuck 1k or something at it in a year or so and be done with it.