Martin Lewis addressed debt tonight in his money show, covering credit cards, balance transfer cards and personal loans. However, the Money Saving Expert noted some of the most expensive debt can be found in regular overdraft accounts.
Martin explained when people think of debt they can often think of credit cards but overdrafts should not be overlooked because: “Most overdrafts are at 40 percent, that’s more expensive than high street credit cards.
“So you should actually prioritise clearing the overdraft first, now there’s a number of things you can do.
“Until January 31, not long, if you’ve got COVID related financial struggles, then Lloyds Bank of Scotland and Halifax will give you up to a £500, three month long zero percent overdraft.
“Santander will do it too but it’s deadline is not as quick and speak to other banks if you’re struggling.”
Monva detailed over a third of UK adults accumulated an average new year debt of £220, equating to £4.1billion.
When thinking of how they’d cover these expenses, 21 percent said they’d be dipping into their savings, 10 percent planned to use an overdraft and 13 percent would seek help from friends and family.
Steve Wiley, the CEO of Monva, commented on these state of affairs: “2020 was a challenging year for the nation’s finances.
“Lockdowns and social restrictions meant a lucky few benefitted from reduced outgoings.
Steve concluded: “Anyone currently carrying debt, whether on a credit card or personal loan, should consider using any extra cash to pay off their debt sooner, and avoid building further interest.
“This could be done by paying off the balance in full or increasing your monthly payments. “Those whose savings do not cover the entire debt should instead focus their attention on the most expensive debt first: the credit cards or loans with the highest interest rates.
“While those with low interest or zero percent balance transfer products might be tempted to spend or save the cash, repaying any debts sooner – and ideally within the Balance Transfer offer window – could help avoid further financial pain down the road.
“Once the debt is cleared, consumers can keep building positive financial habits by putting any ongoing savings into investments.”
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