Almighty consumer rights champion Martin Lewis has offered a genuinely novel way to help people cut back on their credit card spending.
Speaking during the latest episode of his ITV programme The Martin Lewis Money Show Live, the personal finance visionary began by recommending a tactic known as “snowballing” to help viewers gradually climb out of debt amid the cost of living crisis.
“Clear your debts in highest interest order first, which for many will be the overdraft,” he suggested.
“Then you take all the spare cash you possibly have and you put it at clearing the highest interest rate debts. You only pay the minimum on the others.
“Then when the top one goes, you focus on clearing the next highest and so on. It’s called snowballing and it gets rid of your debts more quickly.
“If you have any savings, use them to clear the debts. If you have an emergency, you can always put it back on the card afterwards, you haven’t lost anything.”
Stressing the importance of being honest with friends and family when facing financial hardship, Mr Lewis continued: “If you’re struggling, tell people you’re in debt, tell people you can’t afford to buy a round. And everyone else, let’s not put pressure on people to spend when they don’t have the cash.”
Back on strategies for actively clearing debt, he advised: “Set up a direct debit to pay at least the minimum. You can pay more, but make sure you’re not missing that.
“Next, make sure you clear the card before the 0 per cent ends or you will pay back the 20-22 per cent rate. If you can’t do that, you need to balance-transfer it again.
“Do not spend on these cards. Do not withdraw cash on these cards, because that is usually not at a cheap rate. These cards are only for shifting debt to.”
But it was his recommendation for a last resort that proved most surprising.
Lewis told his (presumably baffled) audience: “If you really don’t trust yourself, get the card, get a bowl of water. Card in the water, bowl in the freezer.
“Then you’ll need a hammer to spend on the card and it might give you a moment of thinking time.”
Inspired.
