MARTIN Lewis has issued a warning to credit card holders struggling with rising costs to try a “key weapon” and avoid high interest charges.
The founder of MoneySavingExpert.com (MSE) is urging people with credit card debt to cut their repayments.
In the latest MSE newsletter, Martin Lewis said: ” Figures just released by the Bank of England show consumer credit borrowing soared by £300m in July, and credit card borrowing is up almost 8% over the year.
“I want to again focus on showing you how to cut existing card costs – especially as we’re tiptoeing towards the high-spend festive season.”
He added: “The key weapon is a 0% balance transfer, where you get a new card that pays off debt on existing cards, so you owe it instead, but interest-free for a set period.”
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.
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 Sun recently put together a guide to the best balance transfer cards to apply for now and pay off debt.
Borrowers hoping to get the longest possible 0% interest free balance transfer period of 28 months will have to apply for Barclaycard Platinum Balance Transfer.
The card comes with with a balance transfer free of 3.45%.
If you think can pay off debt in a slightly smaller time period of 27 months, you may be better off opting for Tesco Bank Clubcard Credit Card Balance Transfer. This card comes with a smaller fee of 2.95%.
Or Lloyds Bank Platinum 0% Balance Transfer Credit Card, which also offers 27 months with a fee of 3.2%.
You can get 27 months interest free with Halifax’s Longest 0% Balance Transfer Credit Card, as well as HSBC Balance Transfer Credit Card, and M&S Bank Credit Card Transfer Plus Offer.
However, the fee on all these cards is a fairly high 3.49%.
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 many ways to tap into interest-free borrowing, which in some cases could be better than another credit card.
Nationwide’s FlexDirect current account has an introductory offer and won’t charge any interest for the first 12 months.
If you can repay it within the year, it could be a better option than switching cards.
You should also check if your local council can help.
Some offer interest-free loans to people on a low income but the exact criteria and circumstances vary.
For example, Brent Council has teamed up with the local credit union to offer interest free loans for debt consolidation.
Or Ryedale District Council, Citizens Advice North Yorkshire and Community First Credit Union have also teamed up to offer a Hardship Grant Fund for locals in need.
People can borrow as much as £500 interest-free, subject to availability and affordability.
By James Flanders, Consumer Reporter
UK Finance reports that we spend a whopping £2 billion a month using our credit cards.
While that little strip of plastic makes everyday spending easy peasy, it comes at a huge cost.
According to The Money Charity, the average credit card debt sits at £2,485 per household or £1,312 per adult.
And if you’re stuck on a credit card with a high APR and only making the minimum repayments, you could be forking out hundreds of pounds extra in interest charges.
For example, if you owe £1,312 on your credit card and are charged 24.8% APR.
If you don’t make any more transactions and pay £100 a month in repayments, you will pay off the card by September 2025 but at £207 in interest.
However, by hunting around for a better deal elsewhere and switching to a balance transfer credit card with a lengthy interest-free period, you can save yourself £162.
If the same person was accepted for a 28-month-long zero-interest credit card with a 3.4% balance transfer fee and made the same £100 repayments each month.
They would pay off the debt sooner, in July 2025, and only fork out £45 towards the 3.4% balance transfer fee.
Before taking out a new credit card or increasing the amount you borrow, it’s vital to consider the consequences.
You should only borrow money if you can afford to pay it back.
It’s always vital to ask yourself if you need to borrow before committing to a new credit card, personal loan or overdraft.
If you use a credit card, I’d recommend that you always pay off your balance in full at the end of each statement period.
Lenders have a responsibility to help customers who are in debt.
If you’re in a debt crisis, your first point of call should be your lender.
They might help you out by offering you a reduced interest rate or a temporary payment holiday – so check in with your lender if you’re struggling.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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