Martin Lewis has issued an urgent “don’t delay” warning for anyone in debt or needing to borrow in the near future.
The MoneySavingExpert.com founder explained how some cheaper credit card and loans deals are being pulled due to fears of further interest rate rises.
The Bank of England base rate is currently at 4.5% but there are fears it could climb to 5.5% if inflation doesn’t fall as fast as expected.
Borrowing becomes more expensive with the base rate is higher - and Martin explained how some of the top deals for loans are already gone as a result.
He further claimed some of the best 0% deals could be pulled soon, which is bad news for anyone looking to cut their debt without paying interest.
Writing in the latest MSE newsletter, he said: "So anyone who has debt, or is considering it, should look now as the window of opportunity for lower rates may be shutting.”
If you already have credit card debt, the MSE team recommends switching your balance over to a 0% balance transfer card.
This means you move the debt you owe to a new card and pay no interest for a set period of time - so you become debt free quicker.
Before you go taking one of these cards out, check for the best deals and use an eligibility calculator to see what you’re likely to be accepted for.
At the moment, Virgin Money offers 31 months at 0% for a 3.5% fee - or if you can clear your debt more quickly, NatWest offers 19 months at 0% and without a fee.
You need to make sure you can pay off the whole balance 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, avoid spending or withdrawing cash on these cards as these are normally charged interest.
If you need to borrow, the MSE team suggested looking at a 0% purchase credit card.
This is a type of card that lets you make purchases for a fixed amount of time without charging you interest.
The longest 0% offers right now are from NatWest and Barclaycard, both offering 23 months, although you may be accepted for fewer months if you go for Barclaycard.
Again, always use an eligibility calculator first, make sure you don’t miss any payments, and only spend what you can afford to pay back during the 0% period.
When it comes to loans, MSE explained how the cheapest rates were under 3% just six months ago - now there is only one lender left offering a rate just below 5%.
For someone looking to borrow between £1,000 and £2,999, borrowing using a 0% money transfer card is likely cheaper than getting a loan, says MSE.
But if you can't get a 0% card, the cheapest deal at the of writing is from AIB which is advertising rates of 12.3% representative APR.
For bigger borrowing, Sainsbury's loans are advertised at rates of 4.9% representative APR for purchases between £7,500 and £15,000 - but again, only borrow if you absolutely have to and if you can afford to pay it back.
If you already have loan debt, you may be able to save on the interest you're paying by taking out a cheaper loan to pay off one at a more expensive rate.
But you need to do your research first, as there are often repayment penalties - use the MSE loan switching calculator to check your circumstances.
Get free debt advice
If you’re really struggling, get free debt advice as soon as possible - don’t ignore the problem.
Speak to one of the following organisations:
- Citizens Advice (0800 240 4420)
- StepChange (0800 138 1111)
- National Debtline (0808 808 4000)
