Martin Lewis issues urgent warning to EVERYONE with a credit card over ‘hideous’ fees you don’t need to pay

MARTIN Lewis has issued an urgent warning to credit card holders over high fees which can be avoided and have “huge benefits”.

The money expert said rather than pay “hideous” interest rates people should look to transfer the debt to a zero-interest credit card.

He explained that this means that instead of potentially paying 20 per cent of the money going in for interest servicing, every penny would go towards reducing the debt.

He said on his BBC podcast: “I always say if you can’t afford to pay off your debts in full each month and you’re paying interest on them you can’t afford not to check if you can get a zero per cent balance transfer.

“A balance transfer very simply is when you get a new card and it pays off the debt on your old card for you.

“So literally you say ‘I want a balance transfer’ and that new credit card will get the details of your existing credit cards and store cards for you and it will pay them. And that way you owe the new credit card the money but interest-free for a set period.”

Lewis advised people to make sure they also check if there’s a fee to move the debt but even this – which is often around three per cent of the total – is a lot less than 20 per cent interest rates.

It’s worth noting that only people with the best credit ratings will be accepted for the top deals though.

Even if you do get accepted, you may also be offered a smaller 0% period and be charged a bigger transfer fee.

You should never miss the minimum monthly repayment or you might lose the 0% interest-free period, meaning it will cost you more.

The consumer experts shared four “balance transfer golden rules” you should follow if you’re thinking about getting a new card.

Pay your balance in full

The best strategy is to set up a direct debit from your bank account which clears the full balance of your credit card every month.

This way you won’t lose the 0% deal.

If you can’t afford to clear your balance, then try to pay off as much as you can without impacting the rest of your finances.

If you only make the minimum repayment each month, it could take years to clear the balance and you’ll pay hundreds – or even thousands – in interest.

A repayment calculator can help you work out how much you’ll pay in interest and how quickly you can clear your balance.

Clear the card

The interest-free period on a balance transfer card won’t last forever.

It is important to be prepared for when it ends as your card will then move onto a higher APR more in line with standard credit cards.

This is where banks make their money, as they rely on borrowers falling onto the high rates of interest at the end of deal period.

Make sure you can clear as much of the debt as possible within the interest-free period, otherwise interest will be added to your repayments once the deal term ends.

At this point it may be worth doing another balance transfer if you still have debts left.

Don’t withdraw cash

You shouldn’t spend or withdraw the cash as you’ll be charged and it could affect your credit rating.

Check your card

Consumers usually have to transfer their debts within the first three months of opening the card to get the interest-free deal – so make sure you check the terms and conditions.

You also can’t usually transfer debts between cards belonging to the same banking group.

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 had credit card debt of £4,000 and were struggling to keep up with the repayments, you could clear it with a balance transfer card.

Your balance is cleared and the credit card paid off, which should give you some peace of mind.

That’s not the end of the debt though, it has just reduced the interest payments.

The money is then moved onto a new card that instead lets you focus on repayments for an interest-free period.

This should help you clear the balance faster.

You still need to repay at least the minimum amount each month. However its best to try and clear the outstanding balance before the 0% period ends to avoid paying interest.

There may also be a fee for 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 with providers online.

There are a few factors to consider when choosing a balance transfer credit card.

The main one is the interest-free period.

This tells you how many months you can repay the debt for without any interest being charged.

There may also be a balance transfer fee and a maximum number of days to actually move your money before the introductory offer expires.

Check your existing cards first to work out how much you owe, as there may be a maximum amount that some balance transfer credit cards will let you move.

In most cases, providers won’t confirm the balance transfer limit until they have processed your application.

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 on the phone, and banks may be able to help in-branch.

To make an application, you will need to provide your name, address and an email as well as details of your income so a provider can assess your eligibility.

You will also need to provide details of 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 need to transfer the balances within a set period, 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 £40k to do urgent check.

And he reveals how thousands could turn £800 into £5,000.