Financial question

carlazai · 4 Mar 2008 at 17:55

Here is the situation: I want to some new things e.g. new PC and golf clubs, total £2,000.

I have money in savings accounts (high interest and savings accounts) to pay for this but I was wondering if it’s better to use credit (overdraft at 9.9%) to pay for these items? My feeling is to keep my assets liquid as these items depreciate over time and credit will be paid off over time.

I would love to hear from people with a business/economics point of view because I would like to know how businesses deal with these situations

Goldy · 4 Mar 2008 at 17:58

Ask the bank for a better rate overdraft facility maybe. What clubs you getting?

Guv · 4 Mar 2008 at 17:58

Are your savings earning more than 9.9%?

Using an interest free credit card would be better than an overdraft at 9.9% if you're going to do it like this.

malfunkshun · 4 Mar 2008 at 18:01

Using credit will cost £2000 plus interest. Using savings will cost £2000 plus the loss of interest while you reinvest. Which costs more? Depends on how long you would be keeping the credit going really. But I would say that the savings option is cheaper.

clv101 · 4 Mar 2008 at 18:08

Only use credit if the cost of the credit is less than the interest on your savings. End of.

Consider any set up fees and tax on interest before making the decision.

Hint, if the best credit you can get is 9.9%, forget it.

Mad old tory · 4 Mar 2008 at 18:10

this would only make sense if you could interest free on purchases. Say you can get a credit card which will offer you 0% on purchases for three months. If you bought the stuff on the card and paid it off with your savings after three months you gain an extra three months interest on your savings. If you can't do that, I would just buy with your savings

gumbald · 4 Mar 2008 at 18:11

What he said ^^

carlazai · 4 Mar 2008 at 18:19

First thank you for so many good replies

The overdraft at 9.9% was just what HSBC quoted me. I looked on moneysupermarket and found a loan for 2k over 2 years at 7.9%, total interest payable ~£150.

So looking for CC with interest free is the best option from the replies

The only thing putting me off is seeing the dent in savings, it’s a psychological thing hehe

These are the clubs http://www.americangolf.co.uk/navpr...=irons1&title=Mizuno-MP-57-Irons-(Steel,-3-PW)

gumbald · 4 Mar 2008 at 18:22

carlazai said:
The only thing putting me off is seeing the dent in savings, it’s a psychological thing hehe

Surely a worse psychological thing is getting a bill every month showing what you owe is increasing?

carlazai · 4 Mar 2008 at 18:28

gumbald said:
Surely a worse psychological thing is getting a bill every month showing what you owe is increasing?

Certainly from a CC point of view. Thats what i was going to avoid like the plague

But from the advice i'm just going to hit my savings :eek: