Savings vs 0% credit card debt

[ErmThisOne]

I will try and keep this short and to the point but my brain is in overdrive so I might just start brain dumping!

I have enough in premium bonds to clear my credit card debt. CC is 0% for another 10 months. I could easily do another transfer as I have a couple of cards with the available balance.

Now normally I would say clear the debt however as they are 0%, I think it may be wise leaving to see if they return anything in PB.

On top of this, I am in a fortunate position that I am able to over pay on my mortgage by a couple of hundred pound each month.

My debt is from taking a pay cut last year while doing some teacher training and also supporting DS at uni. I did have the money in PB but it felt safer to keep that for emergencies, especially with me having such a good deal on it. Like I say though, I could remove it all from PB and clear it.

Does this make financial sense though? I am paying slightly above the min payment, overpaying on the mortgage but also adding around £200 into savings each month.

If it was costing me in interest, without a doubt I would clear it off, but I feel like I don’t know what to do for the best, and would feel a little unsafe knowing all my savings were gone.

What would you do, and why?

I would do the same. Keep the pb’s. Overpay on mortgage as much as possible. Keep a direct debit paying off the cc

The only alternative would be to take all the pb money and overpay that on the mortgage. But then you definitely won’t win anything, and my friend wins quite a lot. Nearly every time from £5-£500 winnings from her £30k investment.

Rather than doing another balance transfer at a cost of 3-4%, best to use savings to pay off the balance just before the 0% period ends

@TalulahJP i think I have had around £200 this year on PB so it’s definitely doing something for now.

@PrincessTilly the only thing that made me think about this today was an email offering me 0% free on balance transfers at 0% for 13 months. I am tempted to transfer again at the end of the month to keep it going a little longer, but it may even be offered again next year.

I have considered not overpaying on the mortgage and paying it off the CC but that seems costly for now. I think you are right about paying off before it ends though, unless another 0% comes up. It’s spread over 4 cards at the minute as they were transferred at different times and it’s annoying as there are 4 payments a month rather than 1. Inconvenient, but manageable.

Congratulations. You have accidentally become a Stoozer, named after the username of one of the members of the Motley Fool Financial website and an earlier enthusiast of the craft, which was to deliberately borrow money at 0% and save/invest it to make money.

Stoozing went away a little after the first financial crisis because it was difficult to earn a significant amount of interest on savings but it's now back and growing in popularity again. Although I did it throughout the 2010s because we had a lifetime tracker mortgage that cost 0.5-1% in interest during that time and we could get 3-5% in regular savings accounts so all our spare money went in there. We also had a current account that paid 3% up to £20k so money also went in there and we spent a good few years where our (admittedly small, started at about £70k) mortgage was making us a profit so we kept it as long as possible until interest rates went up in 2022/3? when we just paid it off from the savings we'd aquired, although I'm now kicking myself that I didn't take a 10 year 1-2% fix when the opportunity arose.

I've been doing it on and off for decades and make at least a few hundred pounds a year. Some people make thousands. If your new offer is fee free, it's definitely worth taking. I've never paid a balance transfer fee as have always been able to find a 0% fee free offer. Or if you can get something like 0% for 3 years with a 3% fee, that's worth taking because you can get over 4% interest and the fee averages at 1% per year.

I don’t know how it works if you go onto another 0% deal with the same lender. They seem to do something that ends up with you paying more.

So if you do take in another 0% make sure it’s another lender.

@Bjorkdidit Oh wow so this can actually be a good thing if done carefully?
I need to look into this to make sure I am not making any mistakes anywhere.

Is there anything I need be be aware of?

My existing lender has offered 0% with 0 fee, possibly as I havent used the card for a while. They may probably close the account as it’s been that long and are trying to coax me back in. But yes, I will probably clear it off near the time or find few free again.