Martin Lewis: Slash your credit card debt with THIS simple trick – Money Perception

The Bank of England warned on Tuesday that UK personal borrowing grew by 10.3 per cent in the last year – and that could lead to many people defaulting.

At 9:30am today it published its latest monthly statistics on credit conditions in the economy.

As part of the report it indicated it wanted lenders to be more cautious over who they lend to and to put £11 billion more aside over the next 18 months.

Policy change could follow in the next few months which sees lenders tightening up their credit scoring criteria on mortgages, credit cards and loans.

So according to the Money Saving Expert, if you need to borrow now, or even more importantly if you need to cut the cost of existing borrowing, then for safety it is worth doing it soon.

Martin revealed how to cut existing debt on credit cards.

He said: “The easiest way is by shifting debt on credit cards to a 0 per cent balance transfer card – this is where you get a new card(s) that repays debts on existing cards for you, so you owe it instead, but at a far lower cost, for a small fee.

“Of course the problem is getting accepted. So rather than just applying willy-nilly which marks your credit file, instead use a soft search tool, or a comparison tool like the Money Saving Expert ‘Balance transfer Eligibility Calculator’ which shows your acceptance odds for more top cards so you can home in on the cards most likely to accept you, minimising applications on your file.

“If all deals are available for you the key is to go for the lowest fee in the time you’re sure you can repay. The longest 0 per cent card right now is from MBNA which gives ‘up to’ 42 months 0 per cent (depending on your credit score) with a 2.79 per cent fee.

“Or the longest non up-to card from Virgin Money which gives those accepted a guaranteed 40 months 0 per cent for a 1.7 per cent fee. If you don’t need quite as long to repay then Halifax gives up to 29 months 0 per cent with absolutely no transfer fee.”

Unlike credit cards, if you clear a personal loan you could be charged up to two months of interest as an early repayment penalty, so it’s slightly more complex.