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Original poster

Should I stop paying off more than the minimum on my credit card so i can 'live better' and go on holiday?

89 replies

user1499590110 · 30/07/2017 11:46

I already posted a thread and im worried im now going to sound like a journalist!!! i'm not. i promise!

basically the background is that i went on a date and this person was talking about his ex being totally shit with money and how she 'thought it was ok to live off 100 a week' - i.e. she wasnt bothered about advancing her career or having any plans to save etc. i found his comments a bit offensive.

these conversations have made me worry about money and have spoken about it with friends. i try to save 100 a month and i live off about 90 a week (which i also have to buy food with, but this excludes travel so i can do the odd thing like go to the cinema). i earn around 30k. should i stop paying off more than the minimum on my credit card (it has 6,500 on it!), and live a bit better instead? my friends think it is crazy that i put so much back into my credit card when it is interest free for the next 2 years, but i feel like it is reckless not to try and pay off the maximum so that it is paid off when the interest free period expires. i havent been on holiday for 2 years because i cant afford it, but having spoken to my friends, their view is that i can afford it im just handling my money badly, and i should transfer the credit if i havent paid it all off in 2 years...

OP posts:
lynmilne65 · 30/07/2017 16:15

Pay 😁

Whathaveilost · 30/07/2017 16:24

And cut up the card so you're not tempted to spend further.

If you did transfer to another deal in two years you'll have to pay 1-3 % of the balance as a charge anyway so it would be costing you

Blimey, CC aren't the work of the devil and the OP doesn't sound like a shopaholic!
CC can be a very efficient and beneficial money resource. Any purchases over £100 I always try and put on my CC even if I go home and then do a bank transfer to pay it off. It gives me extra protection on the goods.

CC using the 0% balance transfer can be an extremely cheap way of having a loan even taking into the transfer feee into consideration. It worked out cheaper buying a car for DS2 on CC than taking out a loan from another source. Just divided the cost over the months and overpaid. It meant I didn't have to use a lump of my savings.

One huge advantage, especially for people trying to build up a credit history is to have a credit card and make sure you pay it off ( either immediately or within the due date ) so you are not incurring fees.
I have a friend that was proud that he had paid everything by cash all his life and had never needed a loan. Very admirable but when he tried to get a mortgage at the age of 30 he struggled. He had no credit history so no lender knew if he was a good bet or not. He ended up with a mortgage company that has a high interest rate (normally for people who have had a bad credit history)

Our finically advisor strongly advised our 18 year old son ( who is extremely good with money and budgeting)to get a card as soon as he could and make sure everything is paid off. He had the same view as many, that CC are a bad thing until we explained a card can't force you to get into debt and that it's just a money tool.

pinkunicornsarefluffy · 30/07/2017 16:33

If you have used it as a 0% loan, then you should pay it off over the interest free period but pay more when you can afford it and clear it quicker. £6.5k is a large sum to owe.

I wouldn't feel guilty about clearing it over it's interest free lifetime but you do need to stick to that and not have a balance to transfer again in another two years.

Teddy7878 · 30/07/2017 16:55

No one is saying credit cards are a terrible idea. But owing £6500 compared to a few hundred is a whole different story and the OP really needs to pay the majority of it off as soon as she feasibly can. No one can predict the future and owing such a large amount of money could cause her serious problems down the line if she doesn't make a large dent in it over the next year or two

gillybeanz · 30/07/2017 16:57

It's because you have the credit card that your debt is too much to afford a holiday.
Pay off the card, don't get another and enjoy your holidays.

gillybeanz · 30/07/2017 16:59

You don't need to have credit to get a mortgage.
We have never had any debt except our mortgage and would be accepted for whatever loan we wanted as we steered clear of debt to allow us to pay mortgage off under 40.

bouncydog · 30/07/2017 17:02

Check what the remaining interest free period is I.e 24 months (270) Set up a standing order to pay that off your card each month. Then put 50% of the difference between that and what you currently pay into a regular saver. Anything over and above that goes into another savings account. E.g. Say you currently pay 500 -270 = 230 of which 115 goes into regular saver and 115 to emergency fund. That way in 12 months you will have £1380 plus interest at 5% and if you haven't touched it, an emergency fund of £1380. You can then review your position then. Don't be tempted by another balance transfer because you will have paid a fee for the cash transfer and if you do a BT then the loan will have cost you more in fees. Credit cards are useful - points, section 75 protection, cheap borrowing and building your credit history BUT only if you use them properly and not to subsidise every day living.

Whathaveilost · 30/07/2017 17:08

None is saying credit cards are a terrible idea
But by telling her to cut her card up and don't use one again, they might as well!

Agreed it is a reasonably large amount but many people will have loans that much or more and don't think twice about it and they will be paying interest.
Sure I'm happy that I don't have a balance on my cards at the moment but it is reassuring to know if an absolute emergency happened I could get my hands on £18,000 credit immediately without having to go to the bank. As people keep saying you never know what's around the corner.
Fortunately I have only needed a smaller sum and that was a few years ago when we had a call that my SIL was seriously ill and things were not good. We were able to book flights For 8 of us within minutes and sort out accomadation and rental cars etc and ready to fly by lunch time the following day without worrying about things. Later in the week everything was paid off. ( Another reason for a CC, car rental companies ask for them rather than a debit card for obvious reasons)

Whathaveilost · 30/07/2017 17:12

You don't need to have credit to get a mortgage.
We have never had any debt except our mortgage and would be accepted for whatever loan we wanted as we steered clear of debt to allow us to pay mortgage off under 40
These days you need some sort of credit history to get a mortgage to show you can manage and pay back the loan.

Clearly a CC as, the previous poster said, they should not be used to subside day to day living, that would be foolish.

HerOtherHalf · 30/07/2017 17:17

Zero percent transfer deals are easy to get right now - who knows in 2 years time though. Base interest rates are low right now - who knows in two years time though. You have a job and an OK salary now - who knows in 2 years time though. Get the drift? The only thing we do know with reasonable certainty is that, barring transfer deals, credit cards are a very expensive form of debt. Keep payingbit off is my advice. People who use debt to live for today invariably sink deeper and deeper into debt.

Rioja123 · 30/07/2017 17:19

I'd be trying to get it paid off as quickly as possible. You should be able to pay back at least £300 a month on your salary?

Original poster
user1499590110 · 30/07/2017 17:31

Hi - thanks for replies. for what is is worth, i'm 30 and i own my own home! so im not terrible with money i dont think.

to clarify, i pay around 370 a month, when i could pay 260. i do this so that i pay it off quicker and before the time expires.

my friends are saying that i should keep the extra 100 a month so i can join them on a holiday, that sort of thing!

OP posts:
Original poster
user1499590110 · 30/07/2017 17:32

and that ABSOLUTE minimum, i.e. the minimum the bank want is only around 50 a month.

OP posts:
Schvitzing · 30/07/2017 17:35

Meh, life is too short. Get another 0% card and transfer the balance nearer the time.

Unihorn · 30/07/2017 17:39

I use 0% cards all the time, but it makes me uneasy having anymore than about £2000 on them so I would say definitely concentrate on those. Some posters don't seem to understand how they work, they are more advisable than loans.

Original poster
user1499590110 · 30/07/2017 18:09

5k of it is directly for the car - and the other option was to take it on finance or get a loan, both of which i thought would be more expensive from research i did.

the other 1,500 is just general spending when i needed a new boiler.

OP posts:
WiganPierre · 30/07/2017 18:10

MN aren't a very financially savvy bunch, most seem to think credit cards are the work of the devil and paying everything in cash as well as overpaying the mortgage and living on baked beans until it's paid is the only noble way to live. Frankly the opposite of what financial advisers would tell you.

OP, now you have explained further I agree with your friends. Having some money in your account you can save and use for treats is sensible if you have an interest-free loan. It doesn't make sense to pay £100 extra per month when you have worked it all out to ensure it will be paid off by the end of the interest-free term.

You sound like you know what you're doing with regard to getting the best deal for your car. And all the posters saying it's a huge debt: so no one uses car finance then? Hmm

EngTech · 30/07/2017 18:14

Think long term - Pay debt off

Debt is ok while you can service the debt, it's when you can't that it becomes a problem.

2 years is a long time to have the debt hanging around and you are hoping to transfer the debt.

What happens if you can't ?

Original poster
user1499590110 · 30/07/2017 18:15

I know I could have just not got a car, but it would have made life nearly impossible transport wise for work.

I genuinely thought it was a good idea to have it all on the credit card, though I appreciate it's not the ideal situation to be in! Obviously the ideal situation would have been to have thousands of pounds to spend upfront. Unfortunately I wasn't in that position.

I think maybe I have been a bit too extreme with paying it back, but I feel anxious about it, and I'm well aware there may not be another 0% deal out there - despite my friends saying there would be!! If I could get it down to 3.5 k it wouldn't bother me so much at all.

OP posts:
Original poster
user1499590110 · 30/07/2017 18:17

EngTech - that is my worry, that there wouldn't be another deal. I have considered just trying to transfer it now to another card so that theres potentially a fresh new 24 months and therefore less pressure.

OP posts:
Love51 · 30/07/2017 18:26

wigan why is overpaying the mortgage bad?

Love51 · 30/07/2017 18:28

OP I'm with you, I need to be sure I can meet my obligations. If a holiday would stress you out due to the costs, why go? Wait until you can afford it on your own terms and enjoy it properly. Your terms, doesn't have to be paid off to the last penny, we are all different.

Unihorn · 30/07/2017 18:29

Perhaps look for another deal now to help yourself to feel a bit better. My mum is a longstanding credit card connoisseur, she has been bouncing money around on them for years and always gets letters offering 36 months' interest free etc. Don't beat yourself up about it because some people on MN save cash in shoe boxes.

greathat · 30/07/2017 18:34

Always pay your debts first. Although saying that. If you have a 0% interest card you could pay the minimum, put the extra in a savings account. Then at the end of the 0% rate pay off with the money in the savings account which should hopefully be a bit more due to interest. You need to be very careful if you do that though!

Mum2jenny · 30/07/2017 18:53

I prefer to pay my credit card in full each month if possible, but if I have an extraordinary expense I aim to clear it in the next few months. I'm not happy having large amounts outstanding on a credit card, unless it's been a careful decision to do so.

OP you're doing the right thing aiming to clear it asap.