Martin Lewis shares top credit cards for paying off debt – ‘Can’t afford not to’

Credit cards: Martin Lewis explains balance transfer deals

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With 2022 fast approaching, there are a few things people can do to help manage their debts and avoid them “really suffering in the new year”. On his Ask Martin podcast from BBC 5Live, the money expert suggested practical ways people can get their finances in order for the new year.

He said: “The ultimate truth is you need to do is budget.

“Work out how much you have to spend and stick to it. Christmas is one day; you don’t want to punish yourself and your family because of it.

“Just stop, and don’t spend. Do what you can to keep the limit down. To make this one year opulent, you will really suffer in the new year.

“The first rule with all debt is to not borrow any more. Don’t overspend. Do a budget and get on with it.

“If you don’t have any money to spend this Christmas, accept that and hopefully you can get it right next year.

“When looking at your debt the next thing you can do is look at how you can cut the interest rate.”

The money saving expert explained that the interest rate is the cost of debt.

The lower the interest, the more repayment goes to clearing the actual debt that people have rather than just servicing the interest.

He suggested that people get balance transfer credit cards.

He continued: “Balance transfer is when you get a new card that pays off the debt on the old cards for you, so you owe the new card but at a cheaper interest rate.

“So go and get yourself on a credit card balance transfer eligibility calculator now.

“If you can’t afford to pay your debts, you can’t afford not to try to do a balance transfer to cut the cost of your debts.

“Once you have moved your debts to wherever they are cheapest and let’s just remember right now that most overdrafts are 40 percent, they are worse than credit cards – so don’t use your money in your bank account if you’ve got a 40 percent overdraft to overpay your credit card.

“Pay the minimum on your credit card and get rid of the overdraft that’s the rule.”
He then suggested that people use the snowballing method.

Martin said: “Line up of all your debts in order of interest, highest interest rate first and then put all your spare cash to clear in the highest interest rate.

“Pay the minimums on all the others and then once the highest interest rate is gone move to the next one and then the next one it’s called snowballing.

“It means you’re getting rid of the most expensive debt the most quickly. It gets you out of debt.”

For those who may struggle paying the minimum on their credit cards, Martin suggested going to see a non-profit debt counselling agencies such as National Debt Line, Citizens Advice Bureau and Step Change.

He concluded: “Their job is to help you, not to judge you. You don’t need to feel embarrassed about it.”

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