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Martin's January debt-busting masterclass
Credit cards, loans, overdrafts, BNPL & more
Got debt? You can't afford not to try and lower the interest, maybe to 0%, to save £1,000s & clear it quicker

Millions are dreading the flip-flapping of the (sometimes virtual) letterbox as this week's mail drops, as it's the week most credit card and other Christmas debt bills are sent. Don't let them fester, soonest dealt with is soonest mended - or at least improved.

If you owe money, the key rules are reduce the interest, repay as quickly as possible, and do it with discipline. Though if you're panicked about debt, and it's got too much, jump straight to debt crisis help.

Below I'll tackle credit card cost-cuts | is consolidating worth it? | cut loan costs? | reduce overdrafts to 0% | buy now, pay later payment help | which debt to prioritise | tips to manage debts and more. Plus it's my debt-busting ITV1 Money Show at 8pm tonight (Tue) too - do watch. I'll cover all this and be joined by debt counsellors to talk about what to do when you just can't pay.

A 0% balance transfer is where you get a new credit card to pay off debt on your existing card(s), so you owe it instead, but with no interest for a set period. That way, more of your payments reduce the actual debt - getting you debt-free quicker (just don't borrow more). As lenders know people are sorting their finances right now, they've pumped out the strongest suite of deals for a while...

i. Protect your credit score - apply via our eligibility calc to see who'll accept you. It shows which cards you're most likely to get, minimising applications to protect your credit score.
ii. Go for the lowest fee within a 0% long enough to clear the debt. Longer balance transfers usually have a bigger one-off fee, so if you can go shorter, it's cheaper. Unsure? Play safe & go long.
iii. Usually rejected? MSE's free Credit Club (also via the Apple | Android MSE App) can analyse the problem. You can also access our eligibility calc there.

Top-pick newbies' 0% balance transfer cards All links via eligibility calc at providers' request
MBNA UP TO 31mths 0% 3.2% fee 24.9% rep APR interest after	Joint longest 0%, yet better as lower fee While it's an 'up to', you'll know the length before applying. Apply via our eligibility calc (it's a shorter deal if you go direct) and, if eligible, you'll be pre-approved for either 31mths with a 3.2% fee, or 14mths with a 3.49% fee (if the latter, other cards are better).
Barclaycard UP TO 31mths 0% 3.45% fee (min £5) 24.9% rep APR after	Joint longest 0%, £20 cashback if moving £2,500+ Though an 'up to' card. Shift £2,500+ within 60 days and you get £20 cashback, which essentially reduces the fee, so it's a winner if you're pre-approved in our eligibility calc for the full 31mths. If not, it could be just 15mths. PS: A slightly higher £25 cashback is available if you are accepted after a CTM comparison.
Tesco Bank Definite 30mths 0% 3.19% fee 24.9% rep APR after	Longest guaranteed-length 0% Even lower fee. Its advantage is everyone accepted will definitely get the full 30mths, so if you've decent acceptance odds and aren't pre-approved for the best rates above, it's a good bet. Plus if you can repay a little quicker, the lower fee is a boon.
Tesco Bank Definite 18mths 0% 0.99% fee 24.9% rep APR after	LOW-FEE guaranteed-length 0% Sweet spot of length & fee. If you can repay quite a bit quicker, this 18mth card is still pretty long but the fee is just £10 per £1,000 shifted. Plus, all accepted get the full 18mths.
Barclaycard UP TO 14mths 0% NO FEE 24.9% rep APR after	Longest NO-FEE 0% card Plus £20 cashback if £2,500+ shifted, but it's an 'up to'. Shift £2,500+ within 60 days and you get £20 cashback which, as there's no fee, actually means you make money on the card. If pre-approved in our eligibility calc, you'll get the full 14mths 0%. If not, you may get just 7mths - then, NatWest's NO-FEE card may beat it, as it can pre-approve for 12 or 10mths 0%.
Top  poor credit history  0% balance transfers
Warning: The rate after the 0% ends will be high. So compare that with your current card's rate. If that's lower, ONLY shift debt you're sure you can clear within the 0% time. If it's higher, shift the max allowed.
Virgin Money Definite 16mths 0% 3% fee 29.9% rep APR interest after	Long 0% and accepts some past credit issues. Even if you've had county court judgments or defaults, you may still be accepted if you've recent history of managing credit, a UK bank account, and either personal income of £7,000/yr or total household income of £15,000/yr.
Fluid (direct link, as not in MSE eligibility) Definite 9mths 0% 3% fee 34.9% rep APR after	Lower minimum income but shorter 0%. Similar criteria to Virgin (though can be applied differently, so check both). Here, you need £5,000/yr min income, 12mths' UK address history & a UK bank account.

ALWAYS follow the Balance Transfer Golden Rules
a) Never miss the min monthly repayment, or you could lose the 0%.
b) Aim to clear the card before the 0% ends, or the rate rockets.
c) Don't spend or withdraw cash. It usually isn't at the cheap rate.
d) Transfer at application (if not, you've usually 60 to 90 days to do it).

My quick balance transfer FAQs
Q. Is it worth applying if my eligibility odds are low?
Q. What if my credit limit isn't big enough?
Q. Can I shift debt to existing cards too?
Full help in Best balance transfers.

Is it worth getting a loan to consolidate credit card debt?

The cheapest balance transfers are interest-free; the cheapest loans cost 6%. So all being equal, balance transfers are cheaper, as long as you can keep shifting the debt to 0% when you need to. Yet an issue for some with bigger debt is the monthly repayment. While repaying more is better, as it clears debt quicker and you pay less total interest, that's just not doable for some, so they look at 'consolidating' card debts into a loan (see cheap loans below). Credit card repayments are flexible but you must meet the monthly minimum. With larger debt, this can be higher than for a loan. Eg, if you owe £10,000 on a card, the minimum repayments can be around £270/mth (depending on the provider), yet on a 6.2% loan over 5 years, you'll pay around £195/mth. Yet as minimum card repayments are a percentage of what you owe, they drop as you clear the debt, so they'll eventually be lower than on a loan, where repayments are fixed. (Though with cards I'd always aim to repay a fixed amount to mimic a loan, to clear the debt quicker.) So loans have the advantage of simplicity and enforced repayment discipline. Get one, and keep making the fixed repayment, and you'll clear it within the time, while balance transfer cards' advantage is cheapness (provided you can keep getting 0% and fix your repayments). It's important too to understand that, with a balance transfer, creditworthiness is key in deciding whether you'll be accepted, and an affordability score (ie, do you have enough income?) leads on deciding your credit limit. Yet with loans, as you're applying for a fixed amount, both credit and affordability score dictate acceptance (eg, it may say yes at £3,000, no to £10,000), making it tougher. More info on both in the MSE Credit Club.

UK base rate cuts affect loan rates more than credit cards, so after a whack of rises things are finally dropping. Therefore it's worth checking to see whether you can cut your loan's cost, especially if you had a poorer credit score then than now.

The start point is to find a loan with a cheaper APR than you've got. Yet after that there are further checks as there can be early repayment fees. Full help in Cut existing loan costs, but here's my brief ABC...

a) Ask your current lender for a 'settlement figure'. That's how much it'll cost to clear your current loan, including any early repayment costs. This tells you how big a new loan you'll need to get to clear it.

b) Find the cheapest loan for the 'settlement figure' & whether you'll be accepted. Our Loans Eligibility Calc shows acceptance odds for many loans - do check before applying. Full current cheapest rates are in cheapest loans, but briefly...

The Current Cheapest Loans £1,000 to £3,000: Zopa (via John Lewis) 9.9%, Santander 13.5% - though a 0% credit card loan may be cheaper £3,000 to £4,000: Novuna, M&S Bank, Santander, all 9.9% £4,000 to £5,000: Novuna 9.7%; M&S Bank, Santander, both 9.9% £5,000 to £7,500: Tesco 7.1%; Santander, M&S Bank, both 9.9% £7,500 to £25,000: TSB 5.9%; Novuna, Tesco, both 6% All these loan rates are REPRESENTATIVE APR, which means only 51% of accepted customers need get that rate, so you may apply and find your rate is higher. It's tough to do much about that (we have a few lenders offering guaranteed rates via our eligibility calc, but not enough).

c) Find out whether the new loan's cheaper than your current one. Use our Loan Switch Calculator to do it for you. Or if you want to DIY, multiply your monthly repayments by how many months you have left (ask the lender if you don't know) to find how much you'll pay if you stick. Then compare that with what the new loan repayments will cost.

Too many think 'credit cards bad, debit cards good'. But for those overdrawn, it's more a case of 'credit cards bad, debit cards worse', as almost all overdrafts are now charged at a typical 40% interest - close to double even a bog-standard high-street credit card.

So for many, a priority is to clear overdrafts as they're so expensive (even if it means making just minimum repayments on credit cards, so the spare cash reduces your overdraft), though first check whether you can cut the interest costs. Here are key options & tips... 

a) Switch banks for a possible £250 0% overdraft & £175 FREE cash. First Direct* gives accepted new switchers a free £175 which can help reduce what they owe, and many get a £250 ongoing interest-free overdraft too (credit score-dependent, and it's the standard 40% above that). Use the overdraft eligibility checker on its site to see whether you'll likely get it. So this is good for smaller overdrafts, or those who just dip in.

First Direct won't switch in your existing overdraft for you; you'll still owe the old bank, though all your Direct Debits and standing orders will be moved as normal. Expect your old bank to ask you whether you can pay the overdraft off, or whether you want to keep the account open while you do (it'll vary by bank). If you do keep it open, payments to the old account are unlikely to be forwarded to the new one so you may need to arrange to move them yourself.

To qualify for the £175... Sole accounts must be opened via app; joint accounts online. You must be a new First Direct customer switching an account from another (non-HSBC) bank. You must do a switch involving 2+ Direct Debits or standing orders, pay in £1,000+ (doesn't need to be in one go and you can take it out once in) and make 5+ debit card payments, all within 45 days of opening the account. Full info: First Direct.

b) Shifting your overdraft to a 0% money transfer card. A 0% money transfer is where you get a special new card that pays money into your bank account, essentially clearing your overdraft, so you now owe the card instead, but at 0% for a set period. Few providers offer these. The two main options are Tesco's 12mths 0% (3.99% fee) and Virgin's 12mths 0% (4% fee) cards. They're 24.9% and 26.9% rep APR after the 0% ends so do clear them within the 0% period (and follow the balance transfer golden rules above, which also apply here).

If you're doing this you need to get it right. It can be complex, so do read our full 0% money transfers guide to be safe.

c) For many with discipline, a 0% spending card may be a better bet. The top 0% spending cards, such as Barclaycard's up to 22mths 0%, are interest-free longer than money transfers, and have no fee, so provide a better financial route. Yet to do it right takes financial- and self-discipline (if that's not you, don't try). First use our 0% Spending Eligibility Calc to see whether you can get a card. If so, once you've got it... 

- Do all normal spending on the card up to the credit limit (don't see it as a reason to spend more), making only min monthly repayments.
- As you're using it rather than your bank account, your income should build up there, reducing your overdraft.
- Once the overdraft's clear, stop using the card.
- Now stay out of your overdraft and put extra money towards clearing the card debt before the 0% period ends and the interest jumps to the 24.9% rep APR (though still cheaper than most overdrafts).

d) Treat overdraft borrowing like any other debt. Try to repay a set amount each month, eg, £50 (so you should always start the next month with a £50 smaller overdraft than the one before).

e) Consider moving Direct Debits to just before payday if you can. The idea is you're overdrawn for less time so costs are lower.

And these are just the tip of the iceberg. Do see our overdraft cost-cutting tips for more help.

Buy now, pay later (BNPL) from the likes of Klarna, Clearpay, PayPal and more is interest-free, so there are no costs to be cut. Used right, it's an easy way to spread needed payments for a short time.

Yet the worry is too many don't think of it as a debt, take them out willy-nilly and can get into trouble, especially over the Christmas period. And now, in Jan many struggle to find the cash (especially as December paydays are often early so the money must stretch longer).

Firms do offer some options to delay repayments (though be aware this can close the time between your next payment and the one after).

- Klarna: You can 'snooze' a payment, once per order, for up to 10 days if you need a respite. That has no impact on your credit file. If you're really struggling you can get up to a 6mth payment holiday, though won't be able to use Klarna in the meantime, and this will go on your credit file.

- Clearpay: Once per order you can 'move payments' up to 21 days with no impact. You can then do it up to twice more, but then your use of Clearpay can be frozen. It also has a longer 'breathing space' scheme for those struggling. Clearpay doesn't (yet) report payments to credit reference agencies. 

- PayPal Pay in 3: Payment holidays last up to one month, though you can only use them once per order. There are no fees or impact on your credit score, though a holiday could mean you can't take out new Pay in 3 agreements until you're back on track with payments.

Regulation is coming - but not until 2026

Many BNPL firms are unregulated, which means you've less legal protection and can't get the ombudsman to adjudicate over complaints. I and many others campaigned for change and in October 2024 the Govt thankfully announced it was coming, but won't be until 2026. Worth being aware - more info in buy now, pay later help.

These are for when you can pay your debts; if not, jump to debt help...

• Don't look at debt in isolation. No one gets into debt for its own sake; it's to pay for other things. So you have to look across all your expenditure... go through everything you spend money on and see whether you can do it cheaper or better. My money makeover takes you through some of that.

  As well as cutting costs, get control of all your spending. The best way is to do a budget, looking across a year, to see where the cash is going. Then what really counts is how you stick to it - many who have tried swear by (or at) my piggybanking system.

• Prioritise paying off the highest interest rate debt. Don't spread your repayment money equally across all debts, nor pay off the biggest first. Where you put the money can have a huge impact. So first list all your debts in APR order from highest to lowest. Include your overdraft if you have one (as these days overdrafts are often the most expensive form of mainstream borrowing).

  Then, if possible, focus every penny of spare cash at trying to clear the debt with the highest interest rate (APR), as it's growing quickest, and just pay the minimums on all the others. Once the highest one is clear, shift focus to the next highest. 

  If your overdraft is the highest APR, just pay minimums on the credit cards, and let the cash sit in your bank account until the overdraft is gone.

• Danger: minimum repayments on credit cards. They are evil genius. They're designed to keep you in debt for decades, as you repay a percentage of what you owe, so payments reduce with the debt. On a £5,000 debt, making a typical minimum repayment, you'll keep paying for 35yrs at an interest cost of £9,000 (try our Minimum Repayment Calc for your situation).

  Yet if you fixed your repayment at £200, approximately the amount of the min repayment in month one, you'd see that debt gone within three years, and just £1,600 interest.

  Though if you've got multiple debts, as explained in the bullet above, sometimes it is tactically correct to make minimum repayments. 

• Boost your credit score... You may then qualify for better deals in future. Join MSE's free Credit Club or, better, via the MSE App (Apple | Android), which will analyse your file and show you what to do.
  
  

• Still got savings? Use 'em to clear costly debts. Some have an emotional attachment to having some savings ahead of clinical financial decision-making. Yet saving is just giving your bank a loan. So if your debts costs are at a higher rate than your savings earn, repaying the debt with the savings will likely add up. Never is this clearer than with a costly credit card. 

  Yet you may think if you clear it, that'll leave you with no emergency savings. In this case, just keep the card open. That way, the worst that can happen is you use the card again in an emergency - at least you saved interest meanwhile. See Pay off debt with savings? and Pay off mortgage with savings?

The solutions above all involve you being in a functional relationship with your debt, ie, you can afford to repay and just want to cut the cost. But for some a different tack is better - full help in our Debt crisis help guide, but I've three questions to help you decide which route is right...

- Do you struggle to meet minimum monthly payments?
- Is your total debt (not mortgage/student loan) over 1yr's salary?
- Do you have sleepless nights or depression/anxiety over debt?

If you answer 'yes' to any of these, forget the solutions above, and instead get free, one-to-one debt-counselling help from Citizens Advice, StepChange, National Debtline or CAP (which gives emotional support too).

They're there to help, not judge. The most common thing I hear after is "I finally got a good night's sleep". Just go for it, read inspiring stories in our Debt-free wannabe forum, and also see our Mental Health & Debt guide.

What about mortgages & student loans? We'll be covering both in the email soon - I wanted to focus on unsecured normal debt first. Yet just in case, here are some key links... Mortgages: Best-buy comparison, Remortgage guide, Mortgage Calc Student loans: Should I overpay? and Can you reclaim student loans?