Money Saving Expert Martin Lewis has issued a warning to anybody in the UK who uses a debit card. According to Martin, who founded the Money Saving Expert (MSE) website, 'debit cards are now danger cards'.
Many people in the UK own both a credit and debit card. However, the general consensus it that credit cards are 'bad', but debit cards are 'good'.
According to Martin Lewis, this simply isn't true. And he's warned people to think carefully before getting their debit card out.
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According to YorkshireLive, Martin explained that the average bank loan is under 8% APR (the cost of borrowing rate); and the average credit card rate is 19% APR. Martin said: "'Credit cards are horrible. Debit cards are great'. Not true.
"If you're overdrawn, your debit card is a debt card, and most consumer overdrafts are now 40%, double a high street credit card. Which means debit cards are now danger cards if you're overdrawn.
"Now the first thing if you're overdrawn is to check your eligibility for a -% overdraft and to what amount. People also ask me, can I shift my overdraft onto a 0% card? The answer is yes, but only a few specialist cards, it's called a money transfer.
"With a money transfer card, you apply for a new card and it pays the money into the bank account for you so you can get rid of your overdraft, you now owe the card. It's best for large overdrafts, you need a decent credit history.
"With your overdraft, treat it like every other debt. Try to shift your direct debits to just before payday, so the longer you're overdrawn, the bigger your interest charges. So if you can move it to just before payday, you won't be in debt for as long and it should reduce the interest."
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