A MARTIN Lewis fan has revealed how he saved thousands in charge card interest using balance transfer cards.
John wrote into Worthwhile Expert, explaining that the site's eligibility checker helped him to transfer all his credit card debt to 0% cards.
He explained within the Money Saving Expert newsletter that his debt had built up through the pandemic, as his employer was refusing to furlough him, pay him or make him redundant.
After using charge cards to pay for the mortgage and for day-today bills, the amount he owed started to spiral.
Moving the debt to a 0% card meant that he could save lb190 a month in charges, that has allowed him to clear his backlog more quickly.
In total, he's saved lb2,280 in unnecessary interest, that they might have needed to pay if he hadn't switched.
John said: "In the last year I have used your tool three times to gradually get all the credit card debt onto 0% cards which is now saving me approximately lb190 monthly in interest payments, that we am using to pay off your debt as soon as possible."
If you've got debts, a 0% balance transfer card could help you end payment interest, meaning you can pay off your debts faster. Here's how it works:
How balance transfer cards work
A balance transfer card allows you to shift debts your debt onto a brand new card having a lower rate of interest.
Often, prepaid credit cards have extended 0% offers meaning you don't have to pay any interest for any certain time period – normally a year or 1 . 5 years.
You may even combine multiple debts all onto one balance transfer card if the limit is sufficient.
If it's not, then you should move the debt using the highest APR (interest rate) to the 0% card, and ensure that every other debts not covered take presctiption your next lowest interest option.
If you keep making the same monthly obligations, that means that all of your cash is going towards paying down your debts instead of lining the bank or loan provider's pockets.
Sara Williams, a debt adviser who writes your blog Debt Camel said: "The best way to make use of a 0% deal is to set up a standing to repay the entire amount prior to the end from the 0% term. This way you've converted expensive credit card debt into a 0% loan.
"So many people think debt at 0% doesn't really matter – but if you want a mortgage there is a mortgage company doesn't as if you having a large amount of debt, even if it's at 0% interest."
There's often a time limit when ever you can make the transfer meaning you'll have to request it within 60 or 90 days.
How to get the best deal
You may not be entitled to a 0% deal, but even though you will find a lesser interest rate than you're currently paying you will lay aside money.
And Martin Lewis says even if you possess a small possibility of getting the card you want, it may be worth applying if clearing you debt is your most pressing financial need.
He said: "Remember percentages really are a clinical measure. A 50% chance means half those in your situation is going to be accepted. Even though 95% seems almost certain, you can still be the One in 20 who doesn't have it. My worry is many are wrongly delay by low odds."
But if you're about to apply for a mortgage as well as other important credit, you'll wish to stick to cards you're likely to be accepted for – it is because rejections may damage your credit rating.
Top traps to prevent with 0% cards
One aspect to be wary of is the fact that 0% cards often aren't designed for day-to-day spending so it's vital that you try to keep them for your debt transfers.
Salman Haqqi, personal finance expert at money.co.uk said: "Balance transfer cards are not designed for spending. This means they'll come with incredibly high rates of interest on regular purchases, so if you use one – make sure it's only to consolidate the money you owe and not for use as an alternative credit card."
Another critical tip would be to make sure that you've repaid all your debt when the balance transfer introductory offer comes to an end.
Otherwise, you'll be switched to a higher interest rate and could end up paying a lot more than together with your original creditor.
If you can't afford to pay all the debt off within this time, be sure you shop around before any deal finishes so that you can make another transfer to some low interest card.
Mr Haqqi added: "Make sure you choose a provider that offers a 0% interest period of sufficient length for you to pay off the money you owe.
“For example, if you can repay lb50 a month, and your balance is lb1,000, it will take you 20 months to pay off your financial troubles.
"To prevent paying any interest, you'd need a balance transfer card with a 0% deal that can last for at least 20 months."
The most essential thing to keep in mind would be to always make the minimum monthly repayments – if you don't you might lose the 0% deal and be stung with expensive rates of interest.
Ideally, you ought to be paying more than the minimum to try and clear your debts prior to the 0% offer expires, but it's worth establishing a direct debit for the minimum add up to be sure you don't a minimum of forget to pay for that.
Andy Shaw, debt advice policy officer at StepChange said: “0% balance transfer cards could be a great option for anyone looking to pay down debt which they're finding hard to manage, although they should not be seen as a silver bullet to debt problems, and may 't be suitable for people who cannot repay your debt within the 0% interest period.
"People should also be cautious about any charges they might incur in the balance transfer. If you're struggling with debt, no matter what the total amount, we'd advise getting in contact with a totally free debt advice charity like StepChange.”
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