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Martin Lewis: 'If you can't afford to clear your credit card each month, you can't afford NOT to read John's email... "I'm saving £2,280/yr interest, which I'm using to clear the debt"'
After an entertaining but exhausting few days presenting Good Morning Britain, I was woken perked up after reading an email to MSE.
This article was originally written by MoneySavingExpert founder Martin Lewis for our weekly email on Wednesday 30 June. It's been updated by the MSE team with the latest product info on Tuesday 6 July.
It inspired me to issue a clarion call to everyone paying interest on existing credit card debt... CARDE DIEM (ut hmm, seize a top card today) - as six lenders are vying to top the balance transfer charts, increasing your acceptance chances.
And it's timely too, as the mood music indicates the next move on interest rates is more likely to be up than down. Here's the email...
From: John
To: successes@moneysavingexpert.com
Sent: 16 June 2021 20:50
Subject: Balance Transfer
Hi Martin and Team,
A year ago, when my employer refused to pay me, refused to furlough me and refused to make me redundant, it left me without any income. With a mortgage to pay and an 8 year old, my credit card debt rapidly increased.
Over the past year I have used your tool three times to gradually get all the credit card debt on to 0% cards and it is now saving me just over £190 per month in interest payments, which I am using to pay off the debt as quickly as possible.
Many thanks. John
A simple message – when it comes to debt, cheaper is better, and perseverance counts. Below, four important need-to-knows.
Four important balance transfer need-to-knows
1. How balance transfers work
A 0% balance transfer is where you apply for a new card with a special offer to pay off debts on your existing credit or store card(s) for you, so you owe it the money instead, but it's interest-free for an extended period. This means more of your repayments clear what you owe – rather than just cover the interest – so you get debt-free quicker.
You can normally do the balance transfer as part of the application process, telling the provider which cards to pay off – if you don't do that you usually have a further 60 or 90 days to request it.
2. Use a credit matchmaker to find the top deal that'll have you
When you apply for credit, the main challenge is getting accepted. So, like other relationships, it's about finding the best card that'll have you.
To help, we've our 0% Balance Transfer Matchmaker, which calculates your eligibility for most top cards and shows your best acceptance match. To do this, it carries out a 'soft credit search', which means only you see it on your credit file - lenders can't - so it doesn't affect your ability to get future credit.
Applying for a card is normally different - that creates a 'hard credit search', which other lenders can see and which therefore does affect your creditworthiness. It's best to use our tool to home in on the right card first, so you can minimise applications and protect your credit score.
If it shows you've a wide card choice, here's how to decide...
a) Go for the lowest fee within the time you need to repay. Most cards charge a one-off fee (a % of the debt transferred). Calculate how long you think you'll take to clear the debt, add a bit for safety, then pick the lowest fee within that time. Unsure? Play safe and go long.
b) Check if it's an 'up to' card – meaning you may get a deal worse than advertised. This can be tough to see on official application forms (it should be in the summary box) but we always break out whether cards are 'up to' or not.
Below is a range of top-pick cards by rate in each category, yet right now there are so many good cards - eg, six offer 29mths 0% - which is why it's best to focus on which is most likely to accept you.
Top-pick newbies' 0% balance transfers
| Card | Key info | Who's it best for? |
| M&S Bank It's best to check acceptance odds first. Or apply*. |
29mths 0%, with a 2.75% fee (min £5) + £25 cashback if shifting £100+ in first 90 days. After the 0%, it's 21.9% rep APR. | If you need the longest 0%, the added cashback makes this card cheapest if shifting less than £3,330. When transferring £100-£900, the cashback is actually bigger than the fee, so you're up a little – even beating the top no-fee card from Santander below. |
| Sainsbury's Bank It's best to check acceptance odds first. Or apply*. |
Up to 29mths 0%, with a 2% or 3% fee (min £3). After, it's 21.9% rep APR. | Joint-longest 0% with the lowest transfer fee, so beats M&S above for transfers over £3,330 – but an 'up to'. |
| Virgin Money It's best to check acceptance odds first. Or apply*. |
27mths 0% with a 1.2% fee. After, it's 21.9% rep APR. | A much lower transfer fee, so beats the cards above (M&S Bank for £1,620+) if you can clear your transferred balance in 27 months or less. |
| Santander It's best to check acceptance odds first. Or apply*. |
18mths 0% but NO FEE. After, it's 20.9% rep APR. | Easy no-cost winner if you can clear debt within 18 months. Though if you're shifting £100-£900, take a look at M&S Bank above. |
| Capital One It's best to check acceptance odds first. Or apply*. |
9mths 0% with a 3% fee. After, it's 34.9% rep APR. | Longest 'poor credit' 0% deal. Offers respite from interest, even to those with past credit problems. But only move debt you can clear within 9mths - else you'll pay horrid interest on what's left. |
You can't balance-transfer between two cards from the same banking group. Full info: Best Balance Transfers (APR Examples).
Eligibility chances don't look great? It can still be worth applying
Remember percentages are a clinical measure. A 50% chance means half those in your situation will be accepted. And while 95% seems almost certain, you can still be the 1 in 20 who doesn't get it.
My worry is many are wrongly put off by low odds. I often tell a tale of something that happened a few years ago, which may help...
I sat with a MoneySaver who had large, costly card debt and a poor credit history. Her eligibility showed zero chance of all balance transfers, except a 20% chance with Halifax. She looked despondent and asked me: "Is there any point?"
I explained that as it was the only credit she needed - there was no mortgage application or similar due - it didn't overly matter that a rejection would mark her file. The reason to protect your credit history is so you can get maximum use from it when needed.
This was her most pressing financial need, so a 20% chance was better than nowt. The worst that could happen was a rejection. She applied and got a 26mth 0% card with a £1,500 limit.
For more on this, and what you can do to improve things, see my related blog: Why you shouldn't worry too much about your credit score - it's not actually a real thing.
3. When you get a card, always follow the GOLDEN rules
Getting the right card is only the start point. To make it work you need to strictly follow the recipe, or it can leave a sour taste.
a) Clear debt before the 0% ends. Clear it or transfer again before the 0% ends or you'll pay the rep APR – which is never cheap.
b) Never miss the minimum monthly repayment. Or you can lose the 0%. It's best to set up a direct debit for the minimum payment as a safety measure to ensure it happens. Yet it's better to pay debts off quicker if you can – so you can still make manual repayments on top of the direct debit.
c) Don't spend/withdraw cash on the card. It usually isn't at the cheap rate and it's best not to build up other debt while you're trying to repay what you've already got.
d) See if you can use existing cards more efficiently too. If you've more than one existing credit card, you can sometimes use them to move debt to where it's cheapest.
Let's say your 30% APR card is maxed out, and you've another at 18%, which isn't. You may be able to shift debt from the 30% to the 18% card, saving you cash without affecting your creditworthiness. In fact, some lenders offer special existing-customer balance transfer deals – always aim to move debt to where it's cheapest.
e) Got multiple debts? Repay highest APRs first. Some try to repay their biggest debt first, or spread repayments equally. Yet it's the debt with the highest APR that's growing most quickly, so that's the priority.
Focus all spare cash on clearing that debt, paying just the minimum on all others. Once it's clear, focus on the next highest APR and so on. And do include overdrafts in this – at 40% many of them are far more expensive than credit cards. If so, prioritise clearing that before the cards.
4. Credit limit not big enough? Take what you get & try again
If you apply, are accepted, but the credit limit isn't big enough to shift all your debt over, don't give up there. The application is on your credit file – shift as much of the highest APR rate debt as you can to the new card. Most let you use 90-95% of your limit to shift debt.
When done, again use our 0% Balance Transfer Matchmaker to see your chances of acceptance for other providers' cards, then aim for a second balance transfer.
If there's a good chance, apply, though each subsequent application can get harder as too many recent applications can indicate you're desperate for credit. So if you have another important application to make – such as a mortgage – then perhaps hold back.
In serious debt? Seek free help instead
The solutions I've put above are for those who can manage repayments, keep their head above the water, and who aren't in a panic over debt. I have three questions you should ask yourself...
- Do you struggle to make the minimum monthly payments?
- Is your total debt (excl mortgage & student loan) over a year's salary?
- Do you have sleepless nights or depression/anxiety over debt?
If you've said yes to any of these, forget the solutions above and instead get free, one-to-one debt-counselling help from Citizens Advice, StepChange or National Debtline. And if you need emotional support, try CAP.
They're there to help, not judge. The most common thing we hear after is: "I finally got a good night's sleep." Read inspiring stories in our Debt-Free Wannabe forum and see our Mental Health & Debt and Debt Crisis Help guides.
PS: If you have experience of mental health and debt problems (or a close family member does), my charity, the Money & Mental Health Policy Institute, is always looking for new members of its mental health and money research panel to help us formulate new policies to help.
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