Martin Lewis dedicated nearly a full hour of his ITV show this week to helping people reduce the amount of debt they owe and finding support if their financial burden is spiralling out of control. The consumer champion urged people not to shy away from letters or bills due this month, which include the Christmas overspend and may be more than usual.
He told viewers the best way to reduce credit card debt is to move your money to a new card, offering a zero per cent balance transfer. Martin said the key rules for everyone who owes money are to reduce the amount of interest you pay – typically 25 per cent, repay the borrowed credit as quickly as possible and get advice from a non-profit organisation if it’s becoming unmanageable – don’t suffer in silence.
Martin’s simple solution to reducing the amount of money you need to pay back is a zero per cent balance transfer, but before signing up for anything, he said it’s crucial to use an online eligibility checker as this will have the least impact on your credit rating.
And it goes without saying, but shop around for the balance transfer with the longest deal as this means you’ll only be paying back the money you owe and not any interest, which is often why people fall into a loop of never-ending credit card debt as interest can be higher than the minimum monthly payment.
Martin Lewis’ four balance transfer rules
To help everyone make the best choices, Martin shared his balance transfer ‘golden rules.
He explained: “First, clear the debt, or at least balance transfer it again if you can, before 0% ends or you’ll pay that higher 25% APR. Second, never miss a minimum repayment each month if you do, you will often lose the 0% and you’ll be up 25% straight away – if you are have bad personal admin, set up a Direct Debit to pay the minimum, that way you’ll never miss and then manually overpay each month.
“Number three, don’t spend or withdraw cash as it isn’t at the cheap rate on these cards.
“Number four, try and do the transfer when you apply, if you’re not ready to do it check how long you’ve got – it’s usually 60 to 90 days.”
What is a 0% balance transfer?
Martin explains in this week’s issue of the MoneySavingExpert.com newsletter that a zero per cent balance transfer is where you get a new credit card to pay off debt on your existing card, so you owe it instead, but with no interest for a set period. That way, more of your payments reduce the actual debt – getting you debt-free quicker.
You can read the full guide to cutting credit card debt and the latest zero per cent balance transfer deals on MSE.com here.
Support for people with money worries
Martin also shared where to find help if a balance transfer isn’t possible and urged people not to put off getting help as the charities and organisations listed below can speak to your creditors and arrange breathing space, or payment holidays for you.
If you need help with money, debt or accessing financial support, free, confidential and impartial advice is available from:
- Citizens Advice Scotland – 0800 028 1456
- Step Change – 0800 1381111
- National Debtline – 0800 808 4000
- Christians Against Poverty – 01274 760720
You can catch up with the Martin Lewis Money Show Live on the STV Player of ITVX.