Many people in the UK are under the impression that credit cards are 'bad', but debit cards are 'good'. However, anyone who uses a debit card and is frequently overdrawn should pay attention toMartin Lewis’ latest warning. According to Martin, who won the NTA for TV expert and has beenhailed a "national hero" , “debit cards are now danger cards”.
The financial expert spent the entire 60 minutes of last week's episode of The Martin Lewis Money Show Live discussing debt and how to pay it off, warning that overdrafts are actually the most expensive way to borrow money.
An overdraft lets you borrow money through your current account by letting you go below your current bank balance. Martin explained how most consumer overdrafts are now double a high street credit card, at 40%, describing them as “dangers cards” if you’re overdrawn.
The money-saving expert advised using balance transfers to move pricey bills onto credit cards with 0% interest rates. He explained: "Now the first thing if you're overdrawn is to check your eligibility for a 0% overdraft and to what amount,
"People also ask me, can I shift my overdraft onto a 0% card? The answer is yes, but only a few specialist cards. It's called a money transfer.”
"With a money transfer card you apply for a new card and it pays the money into the bank account for you so you can get rid of your overdraft, you now owe the card.”
Martin added that this option is best for large overdrafts and requires a decent credit history. He also suggested that people should treat an overdraft “like every other debt”. In order to reduce the time you are overdrawn, and therefore reduce your interest charges, one option is to shift your direct debit payments to just before pay day.
However, the same rules don’t apply for those with multiple debts. In these cases, he advised people to list all their debts in order of interest rates, with the highest first. Taking any spare cash, they should then pay the highest interest rate first while ignoring the others.
Martin said: “When this one goes, you then focus on clearing the next-highest interest rate.
"Once that goes, you clear the next and the next and so on. It's known as snowballing and it means you get rid of your debts more quickly."
He also advised that those in serious money trouble should contact services like StepChange.
Martin has also recently sharedcheaper ways of drying laundrythat only costs 7p an hour, helpful advice forkeeping warm during the winter monthswithout having to rely on central heating, andreasons why your energy bill could be wrong and how to check .
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