The simple money move to slash credit card debt by ‘hundreds’ – millions missing out | Personal Finance | Finance

If you’re feeling swamped by a mountain of credit card debt, you’re not alone. Millions of Brits walked into the year with an average of £2,601 of card debt. What’s worse is that in the three months to June, Bank of England data showed credit card defaults surged to their highest levels since the 2008 financial crisis. Experts have warned that the sharp rise in missed payments paints a grim picture of people’s finances amid wider cost pressures. And high average card interest rates of 36.81% are not helping.

Compounding the problem, more than one-third of cardholders admit they do not understand how interest charges accumulate. Millions, therefore, end up stuck paying standard rates when a 0% balance transfer card could save them hundreds of pounds and help them pay off debt months, if not years, sooner.

A balance transfer card lets you move your high-interest debt to a new card that offers 0% interest for a set period. Currently, the best deals on the market offer up to 36 months interest-free from lenders like HSBC, Barclaycard and Tesco Bank.

Putting the savings into perspective, Moneyfacts analyst Rachel Springall calculated that someone owing £2,000 on a card charging an average 36% APR would take two years to pay it off with £115 monthly payments, spending £700 in interest alone. Shifting that debt to a 0% balance transfer card with a £150 monthly payment clears the entire balance in 14 months without paying a penny in interest.

There are a few important things to keep in mind before applying. Providers typically charge a balance transfer fee of around 2% to 3% of the amount you move. On a £2,000 transfer, that’s roughly £40 to £60. Still, compared with a year’s worth of interest, it’s a price worth paying. Making at least the minimum payment on time each month is also vital.

You could lose your 0% deal if you miss one. And whatever you do, do not spend on the new card unless it comes with a 0% purchase offer. If it doesn’t, you’ll incur higher standard interest rates. MoneySuperMarket says the average person can save as much as £411 by shifting their debt, and in this financial climate, it’d be daft to ignore it.

Use comparison sites to find the best deals and make sure to read the small print. If you need any further support, contact debt charities like StepChange and the National Debtline on 0800 138 1111 and 0808 808 4000, respectively.

Do you have a burning question about pensions or state pensions that needs an answer? We’ve teamed up with investment experts at AJ Bell to help. Please email katie.elliott@reachplc.com to address anything from confusing taxation and withdrawal rules to passing on pension wealth to loved ones.

Teachers, emergency services, and NHS staff – and those retired from these professions – can nab significant discounts through platforms like Health Service Discounts and Discounts for Teachers. As a thank you to key workers, these schemes provide thousands of exclusive savings across retail, travel, dining and utility bills.

Signing up is totally free; you can register online using an eligible work email address or upload a document, such as an ID, payslip, contract, student ID, P60, or other supporting evidence to prove your eligibility. Once verified, members can start saving hundreds of pounds per year on everyday expenses.

To help those gearing up for road trips or staycations over the summer holiday, both schemes recently partnered with the AA to offer members an exclusive 50% discount on premium breakdown cover.

For an extra £4.99 for two years, people in the same professions can nab a Blue Light Card and unlock even more discounts from 15,000 brands locally and nationally. From cheaper cinema tickets and flights to savings on meals out and gadgets, the card will more than likely come in handy this summer.

Don’t feel put out if you don’t qualify for these cards, however. More options are available, such as the Charity Worker Discounts scheme, which staff in this sector can also join for free. The card offers members savings of £2,000 per year. Or, are you looking for a card where jobs aren’t factored in? Tastecard has launched a 50% off summer sale, letting new members join for £39.99 per year instead of £79.99 (or £3.99 per month instead of £7.99). People can snap up hundreds of pounds worth of savings through 2-for-1 deals at restaurants or discounts on days out.

With household budgets still feeling the squeeze, paying full price should be the absolute last resort. Fortunately, a quick five-minute application can put hundreds back in your pocket.