Martin Lewis shares tip on how to save money while paying off credit card debt
Using this method can help stop a high-charging debt from increasing faster
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Your support makes all the difference.Martin Lewis has reiterated his crucial advice ahead of Christmas that people with multiple credit card debts should focus on clearing the one with the highest APR while paying the minimum on the others.
The personal finance guru urged viewers of ITV’s The Martin Lewis Money Show to take heed of this tip amid the cost-of-living crisis – when borrowers’ pockets are expected to be hit harder by rising rates of interest and inflation.
The majority of the money that someone in overwhelming debt has available – after paying living expenses – should be allocated to the debt with the highest APR, as failure to do this could see their debt spiral out of control.
Mr Lewis said: “Always, when you’ve got debts, list them in order and you prioritise the one with the highest APR – the highest interest rate – because it’s growing more quickly and you pay the minimums on everything else.
“And then when that one’s gone you focus on the next-highest. Because if you [pay] equally on all of them, you’ve got the one that’s growing the most quickly and you’re not trying to get rid of it.”
Borrowers should also try doing this with their overdrafts as some of them can be just as expensive as credit cards, he added.
Mr Lewis also said that people overwhelmed by their financial struggles should contact advice charities so that they can get some peace of mind and a good night’s sleep.
But he warned that the charities are expected to become much busier in the run-up to Christmas, and the weeks after.
Mr Lewis listed the main ones as Citizens Advice, StepChange, National Debtline, and CAP (Christians Against Poverty).
He said it was particularly important to contact an advice charity if a borrower was either struggling to pay minimum payments, has debt – excluding mortgage and student loans – larger than a year’s worth of their salary, and if they are struggling to sleep at night or have depression or anxiety.
Mr Lewis also said: “Of course, you don’t want to borrow any more and you want to minimise your spending to see if you can recoup extra money – I know it’s difficult in the cost-of-living crisis – to put toward your debt.”
Borrowers with medium to high credit scores could benefit from shifting their debts to a credit card with a lower, or even 0 per cent, APR to give them some breathing room while tackling the amount owed, his website MoneySavingExpert says.
“Even if you don’t have a great credit score, there are still attainable deals” on balance transfer offers, it adds.
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