Can I Pay off my
credit card debt
with my pension?

Use your pension to pay off credit card debt

If you are aged 55+ and have a personal or company pension you are not currently paying into or receiving,
you can cash in 100% of your pension as a lump sum – up to 25% Tax Free*

Pay off your credit card debt with your pension Fund

As part of our Pension Release case studies we take a look at how you can pay off your credit card debts using your pension fund.

If, like many people, you are building up credit card debts, then the good news is that you may be able to pay them off by releasing money from your pension early.

You can ONLY do this if you are age 55+ with a personal or company pension you are not paying into or receiving. You can continue to work after releasing cash from your pension.

Case Study

Here is an example of how you could be £9,300 better off by using your pension to pay off your credit cards debts.

  • Steve from Birmingham is aged 56 and has credit card debts of £12,500.
  • He pays this off at £232 per month. At this level it will take 10 years to pay off.
  • It would take 10 years to clear and he would pay back a total of £28,072.

Here’s how he could use his pension to be better off, assuming a pension pot worth £50,000.

  • Release a 25% tax free cash lump sum from his pension, this gives Steve the £12,500 to pay off all his credit card debts, making him debt free and with £232 extra each month in his pocket.
  • Steve then pays the same £232 into his pension over the next 10 years. The government will increase this by a further £46.40 every month.
  • Steve can continue to work after releasing cash from his pension.

The pension value after 10 years if Steve hadn’t used his pension to pay off his debts: £57,600

The pension value after 10 years if Steve releases £12,500 tax free cash now and pays £232 per month into his pension: £66,900

Steve is better off by £9,300 instead of paying credit card interest.

This is a very simple scenario to show how it works, everyone’s circumstances are different.

Assumptions:

Interest rate on credit card = 18.9% APR (Barclaycard typical advertised rate Maintain Credit Card source: thisismoney.co.uk December 2018)

Pension fund remains invested for 10 years and grows by 5% a year adjusted for inflation illustration provided by Royal London and AXA. The growth rate could be more or less than this.

Basic rate tax relief applied to the pension contribution, which could change in the future.

Once tax free cash has been taken, the remaining fund, when released, will be taxed at your marginal rate depending on your circumstances at the time and could change in the future.

Is Pension Release suitable for you?

The new Pension Freedom Rules gives you greater flexibility in accessing your pensions funds early, which can be used to pay off your credit card debts or any other debt. 

It is vital that you take professional advice and understand the implication to your tax position, your death benefits and future retirement income when cashing in a pension to pay off credit card debts.

If you would like to find out more Get Started Today and receive our free Pension Release Information Pack on how to release cash from your pension to pay off your credit card debts. 

WARNING

This service only applies to pensions in the UK.

Taking benefits early will almost certainly reduce your pension income in retirement and is only suitable for a limited number of people and circumstances. This should not be seen as an easy option for raising cash.

If you release all your money from your pension early you will not have anything left to provide you with income in retirement.

Need advice on USING your pension to pay off CRedit card debtS?

Grove Pension Solutions Ltd is regulated by the Financial Conduct Authority.

We specialise solely in Pension Transfer and Pension Release retirement services.

We were established in 2007 so have many years of experience successfully helping 1000’s of individuals. Some of them we advised to transfer their pensions and some of them we advised to leave their pensions where they are and not transfer them.

So why not Get Started Today and receive your free Information Pack.

NO OBLIGATION

CURRENTLY IT'S FREE TO KNOW YOUR OPTIONS

Get started today and receive expert advice from Grove Pension Solutions

Testimonials

Your staff gave me so much relief and I would like it known that your staff are helpful, understanding, and make the whole process easier than I thought it would be. I am so so happy to have put this in your company’s hands.

Mrs ED, Manor House

Definitely I would recommend Grove Pension Release to anyone as they give personal and friendly help to people who need help, where other companies don’t.

Mr MG, Stockport

Very satisfied from start to finish with the quick & professional service.

Mr HB, Lancaster

Found your service to be very professional. Your staff were polite and friendly ready to explain / clarify any query I had relating to release of my pension fund(s). Even went the ‘extra mile’ to update me via phone and text.

Miss RA, Kent

I found Grove to be very professional people and very knowledgeable. The way they dealt with my pension release was second to none.

Mr DH, Warrington

Your staff were very helpful from the start and very professional in their approach to what is a complex field. I would recommend your services to anybody.

Mr AS, Oxford

I looked around the internet for some time, all I looked at was very confusing to me. I then found Grove Financial and found it very easy to read and take in. I sent an email with a question to see the response. I had a perfect response in plain english. I was very happy to carry on with the excellent personal service.

Mr JB, Bristol

This was the best decision I have made. I cannot express how helpful Grove Pension Solutions were. They go the extra mile to ensure you receive the best service. Their staff are very knowledgeable, professional and friendly, not something other companies offer these days.

Ms JM, Glasgow

At all stages I was completely satisfied with the help I got. At every stage I was made aware of any pro’s and con’s of pension release.

Mr JE, Maidstone

GROVE SUPPORTED CHARITIES

Grove actively support the following charities and institutions

Livability
Libra
Libra
Bromley Mencap
Aquaid