What’s the best thing I could do with ~£1,000 that I don’t need to touch for six months?

[me123321]

Getting my Christmas bonus soon and am going on a lads’ trip to the Euros in June. I’m going to put a grand aside as my spending money (everything else is paid for). What’s the best, safest thing I can do with that money that will turn it into a little bit more? I have Revolut; their vaults pay alright-ish interest (I think) - is that a good idea? (I also technically have accounts with Starling and Monzo but they haven’t been used in years so may be dead - I can check if advice suggests I should)

The fact that I’ll need the money as Euros is relevant I think - I don’t really want to use a credit card to withdraw cash abroad and Germany is really slow on the uptake with contactless etc.

For further context I have a little bit of credit card debt but nothing horrific (it’s being paid off at a good rate), and a middling but improving credit rating, so if I need to apply for something new I can do so but it maybe wouldn’t be a guarantee.

Thanks for any advice and apologies if I’m not asking in the right place or the right way.

 

[treyarch1]

@me123321 For the next 6 months:

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

When it's time to travel:

https://www.moneysavingexpert.com/travel/cheap-travel-money/

If you're paying hefty interest on the credit cards, it would be a better plan to pay them off with the bonus, and then save up from what you would have spent on repayments.

 

[me123321]

@treyarch1 !thanks

I’m getting a fair bit more than the £1k for my bonus and it’s being used to service the debt (to completion, mostly, but not quite entirely). Definitely an argument for using the £1k I’ve earmarked for my holiday to get closer to closing the debt but I’m curious to see if there’s something better I can do with it. Thanks for the links — going to check them out.

 

[socalexile]

@me123321 Why wouldn't you use the £1000 to pay off the credit card debt?

It sounds like what you're looking for is an easy-access savings account. MSE has a guide: https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess

 

[me123321]

@socalexile Just seen I think I’m meant to say !thanks here

 

[me123321]

@socalexile Thanks for the link, going to check that out!

The credit card debt is being paid off monthly at very, very little cost in interest. I reckon I can make more in interest with the £1k in the right account, than I can save by paying off the CC. I might be wrong, but that’s why I’m asking. Thanks again for your reply.

 

[socalexile]

@me123321 You almost certainly are wrong. Credit card interest will always be higher than the interest you earn on savings accounts.

Put £1000 in a 5% saving account for a year and you make £50.

Now let's say you had £1000 in cc debt with an APR of 23% (about average). Over a year you'd pay £230 in interest.

In that situation you'd save £180 by paying off the credit card.

 

[me123321]

@socalexile !thanks

This is the basic breakdown I really needed, and I’m grateful

 

[rachel96]

@me123321 Pay off your credit card debt now.

 

[me123321]

@rachel96 I fear I’ll spend more in forex fees by having to use the CC in Germany, than I’ll save in interest by paying off the card. I haven’t done the maths… (but I’ll come back to you when I do)… is this a legitimate concern or am I making stuff up?

 

[rachel96]

@me123321 You can still use the card in Germany, just pay it off now, then pay off whatever you spend after the trip.

 

[me123321]

@rachel96 !thanks

You and another poster have explained this really well and made it clear I was worrying about the wrong thing. The extra £1k I have after my bonus has gone on other things will go onto the remaining credit card debt. Genuinely grateful.

 

[mhrova]

@me123321 Just make sure that once the credit card debt is paid off you put what you would have paid in repayments into a savings account so you have cash for the holiday and you don’t get yourself in debt again for it.

As for spending abroad I’ve always used my Monzo account. They use the Mastercard intra bank exchange rate and there are no fees. Generally you won’t get a better exchange rate.