Martin Lewis, the renowned money-saving expert, has offered crucial advice on overcoming credit card debt during a recent appearance on ITV’s This Morning. Speaking with presenter Cat Deeley, Lewis laid out clear strategies to help viewers manage their finances more effectively and reduce interest payments.
In the segment aired on January 8, Lewis identified balance transfers as the most effective tool for handling credit card debt. He explained that transferring outstanding balances to a new card offering 0% interest can save significant sums in interest—one of the best moves to regain control over debt. Importantly, he stressed the need for favorable terms from the new credit card provider.
Lewis highlighted two essential rules for those considering balance transfers, particularly to protect their credit score: “First, don’t apply for new cards randomly. Instead, use an eligibility calculator on comparison websites. This checks your chances of acceptance without leaving a mark on your credit report. Applying blindly results in a hard inquiry that can lower your credit rating.”
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He further explained how to pick the right card if you have options. “Aim for the card with the lowest one-off fee and the longest 0% interest period,” he advised.
When Deeley asked for clarification, Lewis gave examples: TSB offers one of the longest promotional periods at up to 38 months interest-free, but with a 3.49% fee on transferred balances. For instance, transferring £1,000 would incur a £35 fee. On the other hand, Barclaycard’s offer of up to 14 months interest-free comes with no transfer fee, making it ideal for those who can pay off their debt faster.
Lewis summarized the trade-off: “Longer 0% periods cost a fee but give you more time to pay off balances without interest. Shorter periods with no fees work if you can clear debt quickly.”
Moreover, Lewis warned against a common misconception: some people believe debit cards are always preferable to credit cards. He stressed this isn’t necessarily true, particularly in cases of overdraft debt. Overdrafts often carry much higher interest rates—around 40% annually compared to an average credit card rate closer to 25%. Therefore, if you must carry debt, credit cards may be the safer choice.
Lewis also outlined advantages credit cards provide over debit cards, such as consumer protection under Section 75 of the Consumer Credit Act. This means if you purchase an item costing between £100 and £30,000 on a credit card and something goes wrong, the credit card company is jointly liable with the seller, offering stronger protection than debit cards’ chargeback mechanism.
Additionally, credit cards can offer rewards, including cashback up to 5% for promotional periods and generally around 1% ongoing. Lewis emphasized the importance of paying off the balance in full every month to avoid interest and maximize benefits.
He concluded by promising detailed guidance on choosing the right credit card and managing debt smartly in his upcoming podcast, breaking down options card by card.