The financial guru said this is a ‘key weapon’ in cutting bills (Picture: Getty/Metro.co.uk)
If you’re one of the estimated 64% of Brits who has at least one credit card, Martin Lewis has a top tip that could save you bigtime.
In the latest edition of the Money Saving Expert site’s weekly newsletter, its founder referenced new Bank of England figures showing credit card borrowing is up almost 8% over the year.
‘Debt can be depressing, dangerous and debilitating, but ignoring it only makes it worse,’ said the consumer champion. ‘The best time to tackle it is right now.’
And in classic Martin Lewis fashion, he also shared a simple yet genius masterclass to go about lowering these credit card bills, telling readers, ‘you can’t afford not to’ give it a go.
According to the financial guru, checking if you can switch to a 0% balance transfer card is a ‘key weapon’ in cutting your debt faster.
‘You get a new card that pays off debt on existing cards, so you owe it instead, but interest-free for a set period,’ he explained. ‘This way more of your repayments clear the actual debt, not just mostly cover interest.’
Switching could save you hundreds (Picture: Getty Images)
One MSE user, Raheem, was previously paying over £90 a month interest alone on his £6,000 credit card bill, and felt trapped in ‘a hole’ due to the high repayments – which he’s now slashed after swapping to a 0% balance transfer for 27 months.
The exact amount you could save is dependent on how much you’ve borrowed,the interest rate charged, and how much you repay each month, but the current average now sits at around 19% APR. So if your balance was £2,495 (the UK household average) and you manage to nab a year-long interest-free transfer paying back £230 a month, provided you don’t spend anything else, you’re saving £241 and paying off your full balance more than a month earlier.
Alongside a range of cards offering the best rates – including options for those with low credit scores – Martin offered up a few need-to-knows you should be aware of before you apply.
Martin Lewis’s balance transfer golden rules
The Money Saving Expert founder had the following advice for anyone looking at a balance transfer:
Clear all debt before the 0% ends: Either pay it off if you can or do another balance transfer once the 0% period is over – otherwise you’ll pay the representative APR.
Never miss the minimum monthly repayment: If you don’t pay the minimum, you risk losing the 0% rate. Martin recommends setting up a Direct Debit for at least the minimum, and then making additional manual payments on top.
Don’t spend/withdraw cash on the card: It’s likely this won’t be included in the 0% rate, plus it’s best not to build up more debt.
Do the transfer on application. If not, check the time limit: If you don’t do it as part of the application, you’ve normally 30 to 90 days until the deal …read more
Source:: Metro
