Martin Lewis shares crucial tips on managing overdrafts and reducing debt effectively
London: So, Martin Lewis just dropped some serious knowledge about overdrafts on his show. He’s warning folks that overdrafts can be a sneaky way to rack up debt, and he’s got some solid advice on how to tackle them.
He kicked things off by explaining that many people think credit card debt is worse than being in an overdraft. But he’s here to set the record straight. Overdrafts can actually be more expensive, with some banks charging around 40% interest. Yikes!
One viewer, Ryan, reached out for help. He’s got a £2,000 overdraft from his student days and is now paying £50 a month in interest. Martin had three great tips for him and anyone else in a similar boat.
First up, he suggested switching to First Direct. They’re offering a free £175 for new customers, which could help pay off that overdraft. Just a heads up, though: switching banks doesn’t automatically transfer your overdraft, so you’ll need to handle that separately.
Next, Martin talked about using a 0% money transfer card. This could be a game-changer for people like Ryan. You get a new card that pays off your overdraft, and you owe nothing in interest for a set period. Just make sure you can clear it before the interest kicks in!
Lastly, he mentioned a 0% spending card. This one’s for the disciplined folks. You’d use the credit card for your regular spending, which means your income can go towards paying off the overdraft. It’s a bit tricky, but it can work if you’re careful.
Martin also reminded everyone to treat their overdraft like a debt. Set a goal to reduce it each month, and consider moving your direct debits to just before payday to save on interest. Simple changes can make a big difference!
