Martin Lewis says common credit card habit could ‘keep you in debt for decades’
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Martin Lewis has shared the ‘evil genius’ way lenders keep people on the hook — so if you’re one of the 36.2 million Brits with a credit card, you best listen up. In the latest edition of his newsletter, the Money Saving Expert founder focused on dealing with debt, offering tips on how to reduce interest and repay as quickly as possible.
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He also claimed one common habit could spell ‘danger’ for your finances: only repaying the minimum amount on credit cards. ‘They’re designed to keep you in debt for decades, as you repay a percentage of what you owe, so payments reduce with the debt,’ Martin explained.
Using an example to illustrate the point, he continued: ‘On a £5,000 debt, making a typical minimum repayment, you’ll keep paying for 35yrs at an interest cost of £9,000. ‘Yet if you fixed your repayment at £200, approximately the amount of the min repayment in month one, you’d see that debt gone within three years, and just £1,600 interest.’.
According to a Kantar study, 20% of people claim they stick to the minimum monthly payment available, and this group are more than twice as likely to ‘buy the sort of things they couldn’t normally afford’ with a credit card. On top of that, these minimum credit card balance payers are 65% more likely to budget using buy now, pay later services compared to the average UK adult, and 42% more likely to claim they tend to spend money without thinking.
