Martin Lewis shares Tip that can make you ‘Debt-Free Faster’

Martin Lewis shared everything you need to know about 0% balance transfers which can make you “debt-free quicker”.

A 0% balance transfer is a credit card that allows you to move your debt from one card to another at a 0% interest rate for a set period.

Martin explained that this could help people pay off their debt faster and save money on interest.

He said: “It is absolutely the crucial weapon.

“Let’s imagine you have £2,300 worth of debt – one on a stale card and one on a rotten card. Both have relatively high levels of interest. So what do you do?”

He first recommended people to apply for a new card that had a “specific balance transfer deal”, which could shift the debt.

The new card would be 31 months 0% with a £2,000 credit limit.

The money-saving expert continued: “So, what do you do?

“Well the first thing is you look at the most expensive debt – that is the one growing quickest, the one you want to get rid of, and you say, ‘Please pay the debt off of that one’.

“And that is what a balance transfer is.

“The new card pays off the debt of the old card so you no longer owe it – its debt has gone down to £0 and you now owe £1,400 but at 0% for 31 months.

“But you have a credit limit of £2,000. Now, in terms of balance transfers, they only let you balance transfer 90% of the credit limit, so that is £1,800, so we’ve got £400 left.

“You may as well do it again, there you go – pay off the stale card, now you’ve got £1,800 worth of debt here and only £500 on the stale card.

“So if you think of it, roughly, your average before was around 23-24% APR on £2,000-£3,000 debt – around £600 interest you were paying.

“Now that’s all interest-free and you’ve only got £500 debt on there so that’s just over £100 – that’s £500 of interest saved, which means far more of your money is clearing the actual debt rather than just paying the interest and that gets you debt-free quicker.

“That’s why balance transfers are so important.”

Martin Lewis also explained what people should do if they cannot afford to clear their credit or store card entirely, warning that people “can’t afford not to try and lower the interest”.

He stated that people should protect their credit history by using an eligibility calculator first. He then suggested that people get the lowest fee within 0% in the time you can repay.

Martin Lewis said: “The longer the card, the bigger the fee.

“If you can repay more quickly, and you are sure you can repay more quickly, go for a shorter card loan fee as it will cost you less.

“But if you are not sure just go long. Have a longer 0%. Play it safe.”

The expert outlined his golden rules for balance transfers, emphasising the importance of clearing the debt or moving it again before the 0% period ends; otherwise, you’ll face a higher APR (annual percentage rate).

He also warned against missing minimum monthly repayments, as doing so could result in losing the 0% rate.

Another key rule was to avoid spending or withdrawing cash on these cards, as such transactions are usually not covered by the low rate.

He stressed the importance of using the “right 0% for the right purpose”.

Lastly, he advised completing the transfer at the time of application, as there’s typically only a 60 to 90-day window to do so.