Should I Pay All at Once or Continue Paying at Zero Interest?

welcomeUniverseWorld on 26/01/2025 - 14:22
Last edited 26/01/2025 - 18:06

I have three debts as below. All at zero percent interest until their expiry dates. I am paying off from part of my forthright salary as below

  1. Debt 1 ($5,344)

    • Monthly payment: $367.50
    • Fully paid off before 11 October 2026 when interest kicks in.

  2. Debt 2 ($7,230)

    • Monthly payment: $497.20
    • Fully paid off before 1 September 2026 when kicks in

  3. Debt 3 ($7,896. Thinking of paying $4,300 upfront now to reduce total debt)

    • Remaining balance: $3,596
    • Monthly payment: $247.29
    • Fully paid off before 1 December 2025.

All debts will be fully paid off from salary before their zero-interest periods end, ensuring no additional interest charges. However, right now, I also have equivalent cash in hand that can pay off all these three all at once.

I am wondering if I should pay off all at once. Or should I continue paying from salary?

A few weeks back, I didn’t have this extra cash in hand. I do now. I am thinking…

Reasons for me to want to pay off:

  1. Self-control: I made this money by taking a chance on a meme coin called Trump, which ballooned in value. I’m not foolish, and I want to use this money wisely to pay off my debt.
  2. Property plans: I plan to purchase a property by the end of this year or early next year, so improving my credit report is a priority. Considering this, would it be better to pay off the debt now and cancel the cards, or should I leverage the zero-interest rate and pay it off gradually while maintaining the account for credit score benefits?
Financial

Comments

  • mskeggs on 26/01/2025 - 14:33
    +13

    Why wouldn’t you put the extra cash in a savings account, collect the 4% interest and pay off when the debts come due?

  • AustriaBargain on 26/01/2025 - 15:22
    +1

    No interest and no possible indexing means there's no reason to pay it early.

    Whatever you bought though, if you're somehow still entitled to a refund on any of them then that could be a third option.

  • Qazxswec on 26/01/2025 - 15:41

    how much are the monthly card fees for the loans?

    • welcomeUniverseWorld on 26/01/2025 - 18:02

      I think one of the cards has an annual fee. Others have no fee.

  • pantsparty on 26/01/2025 - 15:41
    +2

    How much self control do you have? Are you likely to waste the cash you have on hand now? If yes then pay off the debts now and don’t accrue further debt. If no then save the money, earn interest and pay off the debt as late as you can whilst still avoiding interest.

    • brendanm on 26/01/2025 - 21:13
      +3

      How much self control do you have?

      OP has three $7k+ debts from "interest free" deals.

      • donga100 on 26/01/2025 - 22:09

        Yes, but the bad credit rating while they still have those debts will help to prevent being approved for new loans.

        • brendanm on 26/01/2025 - 23:18
          +1

          Was more to point out that OP does not have much self control.

          • donga100 on 27/01/2025 - 00:41
            +1

            @brendanm: Yeah, I was pointing out that not being able to get approved for more of those loans might be a good thing.

        • welcomeUniverseWorld on 27/01/2025 - 08:58

          My credit ratings is above 870 ….;)

  • soan papdi on 26/01/2025 - 17:54
    +1

    I am wondering if I should pay off all at once. Or should I continue paying from salary?

    Pro to paying off:
    - less mental burden
    - less debt to report if you apply for a credit card or other loan

    Cons of paying off:
    - less money in hand now
    - loss of growth if you invest this amount

    • welcomeUniverseWorld on 26/01/2025 - 18:09

      Mental burden is a big thing unless I can make everything auto pay & forget about it. Researching

  • vorsprung on 26/01/2025 - 19:38
    +1

    If you're looking to buy property I'd try to clear off the debt a few months prior to any loan applications. Perhaps you need to clear it sooner, I have no idea. My gut tells me a few months should be good.

    Other than that, if you're sensible and can prevent your self from spending the funds, put it in a high interest savings account as others have suggested.

  • vorsprung on 26/01/2025 - 19:39
    +6

    Also be prepared to pay CGT on your Trump coin investment.

  • Marcsie on 27/01/2025 - 11:10

    lol

  • Eeples on 27/01/2025 - 16:48
    -1

    I would pay off the debt that is a credit card which has an annual fee unless it has a great rewards system that you can still use without it effecting your monthly payments of the interest free debt.

Login or Join to leave a comment
Login Join