A store card or credit card can suit some spenders, however, the interest that you pay on them can soon add up. In order to pay off the debts on old cards, Martin Lewis has previously suggested that shoppers switch it onto a new card which boasts a lower rate – which is usually at zero per cent. This is known as a balance transfer. In the past, Martin advised those with credit or store card debt to pursue this as the deals on which the zero per cent rates were getting longer – but today, the 46-year-old issued a warning.
Speaking on This Morning, the money saving guru explains that the “bandwagon has turned around”.
In the past, the deals had been spanning around 40 months at zero per cent, but now, it seems they’re getting shorter.
So much so, in fact, that it seems that for the first time since 2013, the longest deals are less than 30 months.
“When you make repayments, the money you’re paying each month clears the actual debt – rather than just the interest,” he said.
As such, this means that you end up debt free in a shorter amount of time, Martin advised.
So, if you already have a store card or credit card, the Money Saving Expert pointed out that it could be worth signing up for a deal now – before they get any shorter.
Martin Lewis: Money Saving Expert’s top deals
“Last week alone two of the prime cards disappeared and the next best deals are substantially worse,” he said.
And, when it comes to Martin’s top deals, he said: “Sainsbury’s Bank and Halifax, you can shift your debt to them for up to 29 months zero percent, with a three percent fee.”
However, these are both “up to” cards, which means the length that you get the zero per cent rate will depend on your credit worthiness.
Martin added: “Often, unless you’ve a great credit score, it is best to avoid ‘up to’ cards, especially if you’ve high chances on other cards.”
Meanwhile, HSBC offer the zero per cent interest rate for 28 months, with a smaller 1.4 percent fee, Martin said, before adding that those accepted for the deal will get it for the full 28 months.
Should you be able to afford to repay your debt in less than two years, Sainsbury’s Bank is giving up to 22 months zero percent, with no BT fee.
“There’s absolutely no costs there whatsoever,” Martin said of the deal, before pointing out that last week the deal offered 27 months.
“The key is to go for the lowest fee card in the time you’re sure you can repay,” he shared.
“Calculate how long you think you’ll take to clear the debt, add a bit for safety, then pick the lowest fee within that time. If you’re unsure, play safe and go for longer.”
Martin went on to explain that not everyone is able to apply for balance transfer cards.
The decision comes down to how the credit card lender has scored you in terms of being considered by them as a profitable customer – with your credit history, earnings, and whether you pass affordability checks all coming into account.
What’s more, every application will make a mark on your credit file – which could have a negative impact on future applications.
“So instead of applying willy-nilly many cards have their own eligibility checkers,” he pointed out.
Alternatively, visit the Money Saving Expert website to use Martin’s balance transfer eligibility calculator, in order to see how likely it is that you would be accepted.
For more information and the latest updates, visit MSE’s Balance Transfer Credit Cards guide.
This Morning airs weekdays on ITV from 10.30am.
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