Martin Lewis explains ‘two minute’ check to cut ‘hundreds’ off credit interest

Financial journalist Martin Lewis is urging Britons to check if they’re eligible for a zero percent balance transfer card as it could slash credit card debt by “hundreds” of pounds.

With “strong signals” that the top deals will be pulled soon, Mr Lewis said not to delay the check to avoid “costlier” and “worse” outcomes.

In his recent Money Saving Expert newsletter, Mr Lewis said: “For anyone paying interest on credit card debt. Immediately take two minutes to check if you can shift debt to an interest-free balance transfer card and cut £100s of unnecessary interest. Don’t delay. It’s very likely most top deals will be pulled soon.”

At the end of May, outstanding consumer credit lending hit a staggering £213.0billion, reflecting an increase of £809million on the total the month before.

Up to 51 percent of UK customers are paying off credit card interest every month according to research by credit app TotallyMoney, and a quarter of 25 to 34-year-olds say credit card debt is their main money problem.

With a zero percent balance transfer credit card, customers stop paying interest for a set period of time – potentially up to 33 months, depending on the card. These cards typically carry a fee of two to four percent of the amount being transferred.

The way it works is that customers transfer their outstanding credit card debt onto the zero percent card and pay off the balance as it is, instead of letting the card accumulate even more interest.

Mr Lewis said it means people’s repayments clear the actual debt instead of mostly covering the interest.

To check if they can apply for a card, Mr Lewis suggested people take “two minutes” to use a zero percent eligibility checker, such as Money Saving Expert’s, which will show the card-by-card odds of which a person would be most likely accepted.

Sharing a success story, Mr Lewis said “Lisa” emailed him saying: “[First,] I got £2,100 of zero percent from NatWest. My [original] card still had a balance, so I thought I’ll give it another go.

“It said I’ve 10 percent chance with HSBC, I thought ‘What have I got to lose?’ I was accepted with a £4,000 limit. [With no interest,] I can up my payments on both zero percent cards to clear them sooner. I can’t thank you enough.”

Mr Lewis added that those who have a choice could opt for the “lowest fee” within a zero percent time period that’s long enough to clear their debt.

He said: “Generally, the longer the balance transfer, the bigger the one-off fee, e.g., three percent of the amount transferred (so £30 per £1,000). So if you can clear your debt quicker, go for a shorter deal to minimise fees. Unsure? Play safe, and go long.”

Providing a few “golden rules” to managing a balance transfer credit card properly, Mr Lewis said borrowers should “never” miss the minimum monthly repayment or they could risk losing their zero percent deal.

He said: “Aim to clear the card (or balance-transfer again) before the zero percent ends, or the rate rockets to the higher APR.

“Don’t spend or withdraw cash. It usually isn’t at the cheap rate and withdrawals may hit your ability to get future credit.”

He added: “The balance transfer must usually be done within 60 to 90 days to get the zero percent – check your card.”

Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 13 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/latesttip.