MoneySavingExpert.com Debt
Feature by Martin Lewis, MoneySavingExpert
For those with existing debts there are record deals available right now to let you cut the cost and save £100s or £1,000s. Yet as the old adage goes, banks are companies that’d lend you an umbrella when the sun shines and ask for it back when it rains. So getting cheaper credit when in debt is tricky – however I have developed credit card eligibility checkers which can help you check what debt cutting cards you’re able to get before you apply. If you can lower the interest cost, then more of your repayment clears the actual debt, not just services the interest – meaning you’ll be debt-free far quicker. So here are the key debt cost cutting need to knows…
I make no apology for saying…. stop borrowing. If you’re struggling, borrowing to make ends meet just elongates the problem - making it even costlier and more difficult. The tips below will help, but if you keep adding to the debt nothing will fix it. So take a deep breath, do a budget and examine all your spending to see if you can cut back.
Best buys are only best if you can get them. While there are many great rates on offer, you need to pass a credit score to get them, and many fail at that hurdle. Worse still when you apply it leaves a footprint on your file and lots of those in a short space of time can hit your future credit worthiness. I’ve given evidence to Parliament on this ‘anti-shopping around’ system - little’s been done.
So to fight back on my site we’ve built a free eligibility calculator – which tells you which cards you’re most likely to be accepted for. Just as importantly it does this without leaving a footprint on your file that lenders can see – so you can home in on the right one, minimising applications. To try it go to www.
MoneySavingExpert.com/eligibility.
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Shift credit or store card debt to 35mth 0%. A balance transfer’s where you get a new credit card that repays debts on the old credit or store card(s) for you, so you owe it instead at a lower rate.
The longest 0% deals for those new to the card company now last nearly three years (a year ago they were 30 months), but as with many things in life longest isn’t always best. Aim for the lowest fee card, ensuring you’ve enough time to clear it. Top picks and golden rules at
www.mse.me/balancetransfers.
Shift your overdraft to 0% too. Debit cards can be debt cards too - if you’re in your overdraft it’s often more costly than credit cards, especially if you bust your limit. So there are two ways to get out of this. a) Switch to a 0% overdraft: Top bank for customer service
www.firstdirect.com offers a £250 0% overdraft (you must pay-in £1,000/ month) and for accepted new switchers a free £100 - which should help reduce the overdraft straight away. For some
www.nationwide.
co.uk 0% overdraft may be bigger, but it’s only for a year and is 50p/day after. b) Shift it to a 0% ‘money transfer’ credit card. A few balance transfer cards also let newbies ‘money transfer’. This is where it pays a lump sum into your bank account, which can then clear your overdraft so you owe it instead. Top pick is
www.mbna.co.uk which gives 24 months 0% money transfers for a one off 2.2% fee (though it’s 22.9% rep APR after the 0% ends). Yet be careful, follow the balance transfer rules above and for more picks and full step-by-step help see
www.mse. me/moneytransfers.
Can you cut the cost of existing loans? It’s complex, as you need to factor in that most loans charge up to two months’ interest to
To advertise in thewire t. 07720 429 613 e.
the.wire@btinternet.com
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