Markets think the Bank of England will unveil the biggest hike in interest rates for over three decades when its decision makers gather for a delayed meeting. The Monetary Policy Committee (MPC) is expected to increase rates by 0.75 percentage points to 2.5% - it would be the highest interest rate that the UK has had since the financial crisis.
As a result, Martin Lewis is warning that credit card and loan interest rates may be about to get worse quickly. Writing in the latest edition of the MoneySavingExpert.com (MSE.com) newsletter, he said: “UK interest rates are expected to rise again tomorrow (Thu) for the sixth successive time. The current 1.75% base rate may go up as high as 2.25%, which'd be the highest rate in fourteen years.”
He added that while most of the focus following the announcement will be on the impact on variable rate mortgages, the consumer champion is urging people with loan or credit card debt to consider switching lenders to take advantage of a 0% balance transfer.
Martin explained: “I want to focus on a less well-flagged impact, on cards and loan debt - which the UK base rate doesn't move as directly, but does set the mood music.
“We're already starting to hear a soft under-chant that deals may get worse quite quickly. So if you need to sort yours out, sooner is safer…”
His big message is that “if you can't afford to clear your credit card, then you can't afford not to check for a...0% balance transfer.”
A 0% balance transfer card simply means that you could shift your current balance to a new credit card, one which offers 0% interest. This means any repayments go towards clearing your actual balance owed and not the interest added on top, which in turn means you clear your balance faster.
The financial guru goes on to list the top transfer card options from Sainsbury’s, Santander and Virgin Money - you can read about these in full here.
Martin also advises people to use an eligibility calculator before applying as any application you make is recorded on your credit file. He suggests using the one on MSE.com, as this will give you details of any impact on your credit worthiness.
He also recommends going for the lowest fee with a 0% long enough to clear your debt, each lender will offer a different deal, so make sure if you go for it, you pick one that works for you.
You can read Martin’s full blog on this on MSE.com here.
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