MILLIONS of credit card users incur interest on their balances each month, diminishing their disposable income and making it harder to get out of debt.
These costly repayments are eroding people’s disposable income and trapping them in debt.
It comes after The Sun previously revealed that credit card interest rates have risen by up to 11% in the last decade.
Just 10 years ago, in April 2024, the typical credit card representative APR sat at 17.9%.
Fast-forward to April 2024, and the average rate is 24.8%, representing a 6.9 percentage point increase.
However, some lenders have hiked rates substantially more in the period.
For example, John Lewis has increased the representative APR on its credit cards from 16.9% to 27.9%, representing a huge 11 percentage point increase.
But experts at TotallyMoney have explained how millions of Brits can cut the interest they pay with a simple switch.
Credit card customers can put an end to paying interest for up to 29 months for a small processing fee of between 2-4% by shifting their debt to a balance transfer card.
With the market-leading offer, customers can stop paying interest for 29 months, saving £1,417 on the typical interest-bearing credit card balance of £2,901, according to Totally Money.
Those with less-perfect credit scores might be eligible for a 16-month card, saving £736, while those with poor credit scores might still be able to save £370 over nine months.
Alastair Douglas, chief executive of TotallyMoney, said: “If you’re paying interest on your credit card each month, then you should consider a balance transfer.
“It’ll stop you from paying interest, so you can focus on repaying your debt.
“You could save hundreds if not thousands of pounds.”
Balance transfer credit cards could be a useful option if you have debt spread across a few different cards or soaring interest rates.
They allow you to move the balance from other cards onto a new one, and you pay no interest for a set period.
This means your debt is easier to pay off because money saved on interest can be used to put toward owed finances.
It’s important to note that you can’t transfer a balance between cards from the same bank.
NOT using a credit card effectively can wreak havoc on your finances and your credit score.
If you don’t keep up with repayments or default on your debt, you are likely to get a black mark on your credit record, which could affect your ability to get a credit card, loan or mortgage in the future.
It’s important not to let yourself get sucked into overspending.
You should always clear the full balance as soon as possible.
If you have a poor credit score, don’t bank on being approved for a card or getting the 0% deal you’d hoped for.
Card providers only have to give the advertised rate to 51% of applicants, so you could end up paying more interest than you bargained for.
If you’ve got a poor credit record, you’re less likely to get the best rates.
And if you are looking for a new credit card, don’t apply for lots at once.
After your 0% period is up, lenders can charge upwards of 40% interest, so if you have not repaid the debt fully by then, try to move the debt onto another 0% deal.
You should always use an eligibility calculator before applying, that’s because every credit card application leaves a mark on your credit file and can affect your credit score.
The best cards currently available include one from Tesco Bank which is offering a 29-month long 0% deal with a 3.49% fee.
Lloyds Bank is also offering up to 28 months at 0% with a fee of between 3.45%.
To assess all the available cards, visit price comparison websites like MoneySavingExpert’s Cheap Credit Club or Compare the Market.
Once you run your details through an eligibility calculator and you’ve been shown that you’re likely to be accepted, make a formal application.
To do this, you will need to provide your name, address and email address as well as details of your income so a provider can assess your eligibility.
You will also need to provide details of how much money you want to transfer to the new card, but you can often do this after you have been accepted.
If your application is approved, you will need to transfer the balances within a set period, usually around 60 or 90 days.
Your old balance will then be cleared and you can start making interest-free repayments on your new card.
THERE are several groups which can help you with your problem debts for free.
You can also find information about Debt Management Plans (DMP) and Individual Voluntary Agreements (IVA) by visiting MoneyHelper.org.uk or Gov.UK.
Speak to one of these organisations – don’t be tempted to use a claims management firm.
They say they can write-off lots of your debt in return for a large upfront fee.
But there are other options where you don’t need to pay.
