Which Do You Think Is Best?

[cameliaheartfelt]

If you have outstanding debt on credit cards approx £7k, and you are about to come out of work, what do you think is the best thing to do? Pay off all the debt and have less around you to live on when you are out of work or just pay off the minimum amount and have more savings to live on until you find work?

[Canary42]

Pay off the loans if you've got the money. In my opinion - but bear in mind I grew up in the Forties and Fifties when any loan was anathema.

[fiction-factory]

In the long run it's much cheaper to use savings to pay off credit card debts rather than pay huge interest payments/charges. As long as you'd have enough left to afford food, heat and light I'd pay off the debts. And you can apply for contribution or income based JSA while you look for work. Using up any savings may belp you get income related benefits

[ummmm]

Pay off the debts.

If you can pay off the debts why have you got the debts?

[cameliaheartfelt]

All credit cards are 0% Apr

[ummmm]

For how long?

[tonyav]

You could just keep moving your cards around to 0% offers, there's always some on the go.

[cameliaheartfelt]

Not my debts, asking for my friend who doesn't know what to do. Not sure which way to advise to be honest. I assume she wanted to keep some savings around her rather than pay off cards in full when working.

[fiction-factory]

If it's 0% then if you can trust yourself to organise the finances I'd keep the £7k in a savings account and set up a standing order to pay off the minimum payment credit card balances each month followed by a final baloon payment. But if your savings would take you over the means tested benefit level then pay off the debt to reduce your savings

[cameliaheartfelt]

How much is the means tested benefit level please?

[ummmm]

Anything over 6k has to be declared.

[Bazile]

If you will be paying more interest on the debt , than you would get from investing the money ; then pay off the loan .

With savings interest rates at the low level it is- and paying the minimum amount - you'll almost certainly be better off paying off the loan

[fiction-factory]

^ except the loans are currently at 0%, bazille.

[Retrochic]

By paying off a sum by direct debit each month this will keep her credit rating in good standing -actually paying the debts off in full my have a negative impact on her credit rating ( strange but true)

[Bazile]

ok right - i didn't see the subsequent post about 0% apr , before i started typing

[bednobs]

plus it might be hard to move to another 0% deal if you are not working .