Martin Lewis' 'freeze trick' will eliminate credit card debt and keep it away
MARTIN Lewis has revealed his five-step method to eliminating credit card debt – including a very unusual freezing trick to ensure it stays away.
The money-saving expert revealed how a credit card with a 0% balance transfer could save people in debt hundreds of pounds.
Balance transfer credit cards are a good idea if you have debt spread across a few different cards or if your interest rate is high.
It allows you to move the balance from other cards to a new one and not pay interest for a certain period of time.
This means your debt can be paid off more easily because the money you save in interest can be used to erode the original loan.
But there are some rules you need to follow to make sure the trick works.
Firstly, Martin says that Brits normally can't switch between two cards from the same group. Second, you must pay off the debt before the zero percent expires or you will pay the higher APR.
He also says that you should never miss the minimum monthly payment or you could lose the zero percent.
And if you don't switch when you apply, you typically only have 30 to 90 days to do so.
Finally, he warned: “Do not spend money on these cards, do not withdraw cash with these cards, it is usually not at the cheap rate.
“If you don't have self-discipline, take your card, get a bowl of water, place your card in the bowl of water and put the bowl of water in the freezer.
“That way, if you want to spend on this card, you'll need a hammer to get it out and it's a good way to apply friction to yourself to stop it.
“Finally, if you don't switch when you apply, they normally only give you 30 or 90 days, so check how long you have left.”
How do credit card balance transfers work?
A balance transfer card can temporarily reduce the interest payments you make on your credit card debt.
For example, if you have £4,000 in credit card debt and are struggling to keep up with repayments, you can settle it with a balance transfer card.
Your balance will be cleared and the credit card paid off, which should give you some peace of mind.
That's not the end of debt, though; it merely reduced interest payments.
The money is then moved to a new card, allowing you to focus on repayments instead for an interest-free period.
This should help you clear the balance faster.
You still have to repay at least the minimum amount per month. However, it is best to try to settle the outstanding balance before the 0% period ends to avoid having to pay interest.
There may also be costs associated with the transfer.
How to do a credit card balance transfer
You can search for the best balance transfer credit cards on comparison websites or directly from providers online.
There are a number of factors to consider when choosing a balance transfer credit card.
The most important is the interest-free period.
This states how many months you can repay the debt without being charged interest.
You may also be charged a balance transfer fee and there may be a maximum number of days to actually transfer your money before the introductory offer expires.
First, check your existing cards to find out how much you owe, as there may be a maximum amount you can move with some balance transfer credit cards.
In most cases, providers will not confirm the balance transfer limit until they have processed your request.
However, a small number of providers have started offering guaranteed balance transfer limits as part of the eligibility check.
You can usually apply for a balance transfer credit card online or over the phone, and banks may be able to help you on the spot.
To apply, you will need to provide your name, address and an email address, as well as details of your income so that a provider can assess your eligibility.
You must also indicate how much money you want to transfer to the new card, but you can often do this after you have been accepted.
If your application is approved, you will be required to transfer the balances within a certain period of time, usually around 60 or 90 days.
Your old balance will then be cleared and you can start making interest-free repayments on your new card.
Meanwhile, Martin Lewis has warned households earning less than £40,000 to carry out an urgent check.
And he reveals how thousands could turn £800 into £5,000.