Martin Lewis is urging people to put one item in the freezer to help cut down costs. The 'ice bowl trick' might seem bizarre at first, but it is one of the easiest ways to stop people from using 0% interest cards for new purchases rather than for debt clearance.
Prioritise high-interest debt
During an episode of the ITV Martin Lewis Money Show Live a few years back, the MoneySavingExpert.com founder advised viewers to prioritise paying off debts with the highest interest rates first. Additional funds should be channelled towards the highest-interest debt first.
Martin Lewis pointed out that by paying only the minimum on remaining balances while concentrating on one debt at a time, you can clear what you owe far more quickly.
Snowballing method
He said: "Clear your debts in highest interest order first, which for many will be the overdraft. Then, you take all the spare cash you possibly have and you put it at clearing the highest interest rate debts. You only pay the minimum on the others. Then when the top one goes, you focus on clearing the next highest and so on. It's called snowballing and it gets rid of your debts more quickly."
He added: "If you have any savings, use them to clear the debts. If you have an emergency you can always put it back on the card afterwards - you haven't lost anything. If you're struggling, tell people you're in debt, tell people you can't afford to buy a round."
Key advice
- Set up a direct debit to pay at least the minimum. You can pay more, but make sure you're not missing that.
- Clear the card before the 0% period ends or you will pay back the 20-22% rate. If you can't do that, balance transfer it again.
- Do not spend on these cards. Do not withdraw cash on these cards, because that is usually not at a cheap rate.
- These cards are only for shifting debt to.
And if you really don't trust yourself, get the card, get a bowl of water. Card in the water, bowl in the fridge [freezer], then you'll need a hammer to spend on the card and it might give you a moment of thinking time.
