Martin Lewis has issued an urgent warning to the more than 35.3 million UK adults with a credit card, advising them to take advantage of 0% balance transfer deals before they become harder to find.
In the latest edition of his newsletter, the Money Saving Expert (MSE) founder noted that top balance transfer deals, which allow consumers to cut the cost of existing debt, have barely changed over the past year. However, he warned that this could soon shift, as markets price in the possibility of the Bank of England increasing the UK base rate up to four times over the next 12 months, starting next month.
Potential impact on consumer credit
According to Lewis, a nationwide rate hike could trickle down to consumer credit, with 0% terms being reduced while APRs and fees are increased. He also speculated that lenders might keep headline deals the same but tighten their acceptance criteria, a change that is often most difficult to spot.
Given this uncertainty, Lewis suggested that now may be the time to act, especially for those owing significant amounts, as debt could cost more in the long run. He said: “If you’re paying interest on credit card debt, my hunch is it’s safest to sort sooner, especially as there are some strong deals this week.”
Understanding balance transfers
A balance transfer involves moving existing debt to a credit card with a promotional 0% or low-interest rate for a set period. This can help consolidate multiple debts into a single payment and clear what you owe faster, as payments go towards reducing the principal rather than interest charges.
Exact terms vary by provider, but typically a one-off transfer fee is charged as a percentage of the amount moved, with extra charges for missed payments, purchases or cash withdrawals. Once the promotional period ends, interest on any remaining balance increases.
The type of deal depends on creditworthiness and eligibility criteria. MSE advises choosing “the lowest-fee card with a 0% term long enough to clear your debt.” After acceptance, the process is simple: fill in the “do a balance transfer” section on the new card’s app or website, or call to request a transfer.
Key considerations for cardholders
Balance transfers can help you become debt-free faster, but only if you clear what you owe before the introductory period ends, or switch to another 0% card. Otherwise, you may face an expensive regular APR, averaging 22.25% and potentially higher.
Missing the minimum repayment could result in a fee and possibly losing the 0% rate altogether, so Lewis recommends setting up a direct debit. He also notes that regular spending and cash withdrawals usually aren’t at 0%, making them expensive, and suggests keeping the card safe rather than in your wallet.
Finally, Lewis advises against further borrowing if possible. Personal finance expert Aaron Peake at CredAbility previously told Metro: “If you’re regularly carrying a balance month to month, switching cards might offer breathing room, but it’s also worth using this time to build habits that help you avoid falling back into the same pattern. It’s easy to focus on the interest-free period as a way to delay, but to make the most of it, you should treat it like a repayment deadline. Set yourself a realistic repayment plan and automate it if you can. Divide your balance by the number of months you’ve got interest-free and aim to clear it within that time.”
