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Credit Card Debt: Martin Lewis Urges Action as Interest Rates Set to Rise

Strategic Insights

— 1 min read

As the UK prepares for an expected interest rate rise this week, Martin Lewis is warning credit card holders to check if they can cut their debt now. The MoneySavingExpert explained that even though credit cards are not explicitly linked to the base rate, deals have been worsening over time. This is because if the cost of borrowing gets more expensive, banks will offer less competitive deals. Lewis urges anyone who already has credit card debt to apply for a balance transfer card to save thousands of pounds by pausing all interest payments for a set period of time.

Key Takeaways:

  • Martin Lewis has warned credit card holders to check if they can cut their debt now ahead of an expected interest rate rise this week.
  • Deals on credit cards have been worsening over time, making it essential for users to check for better offers.
  • Applying for a balance transfer card can help users save thousands of pounds by pausing all interest payments for a set period of time.
  • Balance transfer cards typically offer a promotional period of 0% interest, allowing users to clear their debt without paying interest.
  • Users need to make sure they can clear the debt before the 0% interest period finishes to avoid paying the representative APR and risk adding to their debt.
  • MoneySavingExpert has a 0% Balance Transfer calculator which performs a "soft credit search" and won't be seen by lenders.
  • The longest 0% balance transfer card available is from Sainsbury's Bank, offering up to 34 months interest-free.

Statistics:

  • The base rate in the UK is currently 1.75%, and it is expected to rise to 2.5% this week.
  • Money markets suggest the Bank could raise rates to 2.5% on September 22 in the biggest rise in 33 years.
  • Up to 34 months interest-free period offered by Sainsbury's Bank balance transfer card.

Sources:

  • Martin Lewis, MoneySavingExpert newsletter
  • "0% balance transfer cards - what you need to know" article on MoneySavingExpert website
  • Sainsbury's Bank credit card product details
  • Ken McKay/ITV/REX/Shutterstock (credit card image)

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