Martin Lewis issues urgent warning to regular debit users on overdraft

‘Debit cards are now danger cards’: Martin Lewis issues urgent warning to regular debit users as consumer overdrafts now stand at 40% – ‘double’ a high street credit card

  • He explained overdrafts are actually most expensive way to borrow money
  • His advice: Balance transfers to shift expensive debts to 0% interest credit cards
  • Read more: Money guru Martin Lewis reveals easy FIRST step to clearing debt 

Martin Lewis has issued an urgent warning to regular debit card users as consumer overdrafts now stand at 40%, ‘double’ that of a high street credit card.

In the latest episode of The Martin Lewis Money Show Live, the show’s namesake spoke about debt and how to clear it.

Martin Lewis explained that overdrafts are actually the most expensive way to borrow money, as they come with higher interest rates than normal credit cards.

An overdraft allows you to borrow money through your account by giving you money despite your account having reached zero. 

In the latest episode of The Martin Lewis Money Show Live, the show’s namesake spoke about debt and how to clear it (file image)

Martin Lewis said: ‘Most consumer overdrafts are now 40%, double a high street credit card, which means debit cards are now danger cards if you’re overdrawn.’

His advice to consumers is to use balance transfers to shift expensive debts onto 0% interest credit cards instead of going into the overdraft.

He also advised people to contact debt advice services like StepChange if they are in real difficulty.

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‘Now the first thing if you’re overdrawn is to check your eligibility for a 0% overdraft and to what amount,’ he added.

‘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.

‘It’s best for large overdrafts, you need a decent credit history.’

He added that if people had to use their overdraft, to schedule direct debits just before payday, as ‘the longer you’re overdrawn, the bigger your interest charges’, so only being in the overdraft for a single day reduces the interest, he advised. 

However, the money expert said that these rules change for those who have multiple debts.

In this case, he advised people to list all their debts in order of interest rates, with the highest rate first.

He said: ‘Then you take all the spare cash you possibly have and you pay the highest interest rate ignoring the others.’

‘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.’

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