A Martin Lewis fan has explained how he saved £2,280 in credit card interest by switching to a 0% deal.
The method MoneySavingExpert reader John used is known as a balance transfer, which is where you move your debt to another card that has better rates.
It involves applying for a new card that has a special promotional period in place, whereby you pay 0% interest on balance transfers for a set period of time.
This then allows you to keep paying off that debt on the new card, but without the pricey interest adding to what you owe.
The Martin Lewis fan, known only as John, says he looked into moving his debt after he was left without income during the coronavirus crisis.
In total, he says switching to a 0% balance transfer card has saved him £190 per month on interest, which works out at £2,280 over the year.
Writing in to Martin and the MSE team, John said: “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.”
Of course, there are some rules to follow if you are considering taking out a 0% interest card - we explain below.
0% balance transfer cards - what to know
These cards need to be used responsibly, otherwise you could end up adding to your debt.
First of all, you need to make sure you can clear the debt before your 0% interest period finishes or you’ll start paying the representative APR.
You also need to always make your minimum repayments, otherwise you risk losing the 0% interest perk.
Finally, you should avoid spending or withdrawing cash on these cards as the rates often aren’t cheap, and you’ll just end up adding to what you owe.
If you think a 0% balance transfer card could work for you, use an eligibility calculator first to check which ones you are likely to be approved for.
MoneySavingExpert has a 0% Balance Transfer Matchmaker calculator which carries out a “soft credit search” and won’t be seen by lenders.
If you’re likely to be approved for one, keep in mind you may still not get the top rate if it is being advertised as “up to” a set number of months at 0%.
Only those with excellent credit scores are likely to get the longest number of months advertised.
However, you may not necessarily need the longest length of time to pay off your debt, so it’s best to check how long you’ll likely need.
There may be shorter cards available with cheaper, or sometimes no fees, as we explain below.
The longest balance transfer cards currently on the market are Sainsbury’s and HSBC, which both offer 29 months at 0% - although Sainsbury’s is “up to” while everyone who gets approved with HSBC will definitely get that amount.
The Sainsbury’s card comes with a 2% or 3% fee on all transfers, while it’s 2.75% for HSBC, and each will revert to 21.9% representative APR after their introductory period.
Sainsbury’s also has a card with up to 26 months at 0% and a fee of 1%, and Santander is the next best player at 21 months - but it comes with zero fees for transfers.
We've run through more of Martin's balance transfer card tips, here.
