Debt Masterclass: Slash the cost of existing credit cards, overdrafts, loans, BNPL and more

Martin Lewis has his debt masterclass this week, helping you slash the cost of your existing credit cards, overdrafts, loans, buy now, pay later and much more! Plus, you tell us your New Year financial goals - some of you want to save more, some want to save less! Mastermind is all about capital gains tax, and how did Martin’s yearly step count competition end? If you want to ask Martin a question, you now can! His Question Time podcast lets you ask Martin absolutely anything and everything (within reason!). So, if you’ve always wanted to know his preferred pasta shape, if he can tie a Full Windsor knot, or have a very complicated question about your finances, email it to [email protected] mailto:[email protected].

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Martin Lewis?

  This BBC podcast is supported by ads outside the UK.

• 0:06Speaker 01

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• 1:47Speaker 03

  Nobody wants debt. I'm 49% admiring, but 51% concerned.

• 1:53Martin Lewis?

  They are a genius invention to effectively keep you perpetually in debt.

• 1:57Speaker 03

  I'll take that one on the chin, as I always do. I'm changing the question, everybody. It serves you right.

• 2:03Martin Lewis?

  Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Now, usually much of it comes from my BBC Radio 5 live show with Adrian Charles, but don't worry, there's bonus money-saving tips and tricks just for you, lucky, lucky podcast listeners. In today's pod, the first new one of 2026, I've got a debt-busting masterclass. How to slash the cost of existing credit cards, overdrafts, loans, buy now, pay later. Should you consolidate? How to get free debt help and lots more to tackle that new year financial hangover. The tellers this week is all about the goals you've set yourself for the new year. They're fascinating. Some say save more, some say save less, and there's an ADHD financial plan too.

• 2:48Martin Lewis?

  And in Mastermind, oh, it's back, sorry, Adrian, it's happening. This week it's all about capital gains tax and it's an important listen for anyone with shares or property that might need to pay it. And to finish, I've just published my annual steps blog.

• 3:04Martin Lewis?

  No, it's not about Fay, H and Lisa Scott-Lee. Well, you'll hear, play the theme tune.

• 3:23Speaker 03

  Martin, Happy New Year. And I must say, each year when I read your blog about your step count, I get a little bit more worried about you. I'm 49% admiring, but 51% concerned. It's too much.

• 3:42Martin Lewis?

  You are correct. And I have to say, 2025, when I broke my record step count, I hit 26,117 steps a day as an average was too much. But I have to say, I would like to blame, there is a woman in Manchester who is my sister's best friend, and it's all her fault, Adrian. It's all her fault.

• 4:02Speaker 03

  I absolve, I reject that and absolve her of any blame at all. I mean, where will this stop? I think I'm right in saying. That you did, the 2025 total was nine million, five hundred and thirty two thousand, five hundred and seventy one steps. I know what you're thinking. You're thinking, I'm gonna get the 10 million this year.

• 4:22Martin Lewis?

  I'm not, and because it was too painful this year. So the woman in Manchester is made out one of my sister's best friends, but also she's a wonderful person, nice human being, but my step nemesis. So for the past sort of six or seven years, in the fitness tracker app, it links you to some of your friends and people. You know, she's been there, she's always been my best competitor. She normally beats me one or two weeks a year. We got to the start of 2025 and she said, I'm gonna beat you this year. And I'm incredibly competitive and I said, no, you're not. So the best tale I can tell you is it was a Sunday in October, I'd done 39,000 steps, which is mammoth. It was 11 o'clock, I checked my app, I'd been leading all week because we did it in a week, we do it in a week by week contest. I was certain I'd win and I looked and she

• 5:06Martin Lewis?

  was 500 ahead. I don't know what she'd done because I was so far ahead to be 500 ahead. I was in Manchester for filming the next day, I left the hotel room, I put on a coat and I started trudging through the city centre, just walking aimlessly in order to beat her. I then start checking my, my app and she started doing the same. So she's also gaining steps, but not quite as quickly as me. So I pushed, walked for the entire hour, even though I needed to be up early filming the next day, managed to get 500 ahead. It turns out she was in her living room on an exercise bike with her fitness track around her ankle to get her steps, which isn't as good as walking. She did over 50,000 steps that day, I did 46,000 steps that day. And my wife and her spouse both said to us,

• 5:49Martin Lewis?

  that's enough. And so we decided we'd keep it going till the end of the year and I won 33 weeks to 19. I think it's very important for me to state that.

• 5:57Speaker 03

  Of course.

• 5:57Martin Lewis?

  But we are now going to unlink ourselves on the fitness tracker app because it becomes, it became an obsession. And I'm aiming to do just 24,000, 25,000 steps a day average next year.

• 6:06Speaker 03

  Okay, don't let yourself go now, will you? And don't you're slipping below 24,000.

• 6:13Speaker 03

  Right, debt, where do we start? We're going to go through product by product in a minute. But first, if someone is generally in debt, what should they be looking at? And we're taking mortgages out of this.

• 6:24Martin Lewis?

  Yeah, we're not going to do mortgages. We're not going to do student loans because they're subjects in their own right and they're a slightly different form of debt. This is, you know, this is the debt you don't want. I mean, no one wants a mortgage anyway. They'd love you to pay your house off and you don't want a student loan, but that's sort of more necessary debt, if you like. So where do we start? Well, I think that actually helps frame this because nobody wants debt. I've never met anyone who says, "Oh, I'm really excited to go out and get some debt today." What we do is we want other things and debt is, debt is a symptom of the fact that either we've had a change of circumstance or we're spending too much. So of course, the first thing that you need to do is do the stuff we always talk about. Do a budget, do a money makeover, go through everything that you spend money on and say, "Can I do it cheaper? Can I do it better?

• 7:08Martin Lewis?

  And if I can't, do I actually need it? Stop borrowing anymore. Use any savings that you've got to clear the debts if you possibly can. Keep a cash emergency fund, though if you've got credit cards, you don't need a cash emergency fund because their credit cards are expensive. Savings doesn't earn you as much. It'd be better to pay off the credit cards with the savings. Try and pay more than your minimum repayments." Here we go. This is not a mastermind, Adrian, so don't panic. If you had £5,000 debt on a credit card

• 7:37Speaker 03

  Yeah.

• 7:38Martin Lewis?

  and you were paying the minimum repayments, how long do you think it would take you before you were free of the debt?

• 7:46Speaker 03

  Um, I don't know. And you weren't spending any more on it?

• 7:50Martin Lewis?

  No, just five grand, not spending any more.

• 7:53Speaker 03

  Um, several years. I don't know. It'll be a long time.

• 7:58Martin Lewis?

  Thirty-five years. If you got that out at the age of 25, you would be 60 before it was clear. You would pay £9,000 in interest. And that's because credit card minimum repayments are designed that they reduce as your balance reduce. O less, you pay less. So they're only ever just covering a tiny bit more of the interest and hardly paying off any of what you actually owe. They are a genius invention by the banks and the credit card companies to effectively keep you perpetually in debt and perpetually paying interest. So minimum repayments are dangerous. Now, I can hear some people saying, "Yeah, it's all very well for you to say, but I can't afford to pay more than the minimum repayments." Here you go, Adrian. So remember, five grand debt was 35 years, £9,000 of interest.

• 8:41Martin Lewis?

  In the first month of that, your minimum repayment would be around £200. So if instead of letting the amount that you pay drop as what you owe drops, if you said, I'm going to pay fixed £200 each month, instead of 35 years, how quickly do you think you'd clear the debt?

• 9:02Speaker 03

  Um, I don't know, a bit quicker.

• 9:07Martin Lewis?

  Three years, from 35 years to three years, from £9,000 of interest to £1,600 of interest. Just to show you how clever those minimum repayments are, how profitable they are for the credit card companies. Now, I'll be coming on later how to cut your interest to zero, but that just puts it in concept. So having said all that, and I'm going to say the one other final sort of big picture point on this, because people will have multiple debts in some circumstances. And while I've just said be careful about minimum repayments, there is a time I would suggest you do minimum repayments. And that's if you have multiple debts. Because what I think you people should be doing is they should be writing a list of all your debt and putting it in order of the interest rate, the APR rate.

• 9:49Martin Lewis?

  And then what you want to do is if you can, I mean, there will be some things with fixed repayments, you want to focus all of your spare cash on clearing the debt with the highest interest rate. Because that's the one that's growing most quickly. And you pay the minimum repayments on everything else. And then once you've got rid of that most expensive debt, then you shift to the second most expensive debt and try and clear that. And that will get you debt free more quickly because you're getting rid of the card or the loan or whatever it is that's most expensive most quickly.

• 10:19Speaker 03

  Okay, should we move on to cards?

• 10:23Martin Lewis?

  Absolutely, yes.

• 10:23Speaker 03

  So products that can get you into debt, starting with credit cards specifically. And with Andrew Amory, an actual step-by-step guide on exactly how to do a balance transfer with credit cards would be great.

• 10:36Martin Lewis?

  Okay. So we'll do first the practicals of what a balance transfer is. A balance transfer is when you get generally a new credit card and it will have a balance transfer deal, which is a specific type of 0% deal. There are others, there's 0% for spending cards and others and 0% money transfers. But you're looking for a 0% balance transfer card. This is in order to shift your existing debt to a new card. Now, what happens in practice is you apply for the balance transfer card. You tell it the details of your old card or cards. You can normally transfer up to 90% of your credit limit. The new card pays off the old card or cards for you. So you now owe the new card and you don't owe the old card. But the new card is at 0% for a set time.

• 11:20Martin Lewis?

  That's the basics of a balance transfer. Two things before we get into what the best deals are. First, as in all things credit, an application goes on your file and too many applications, especially in the short space of time, can be negative for your acceptance chances of future debt. So you want to minimise applications. You don't want to not apply because applying is important because you want to get the product, but you want to minimise them. So you should be using an eligibility calculator. You can have these on individual sites, but they're generally better on comparison sites. What that will do is you put your details in, it will do a soft credit search. That means while it will go on your credit file, it won't be used by lenders and doesn't diminish your acceptance chances in future.

• 12:04Martin Lewis?

  And it will then tell you which of the top deals you are most likely to be able to get. Now, this is very important because when I'm talking about choosing a card in a minute, I'm going to be talking about it as if you've gone to an eligibility calculator because that's the right step. Then when it comes to choosing a card, the thing to understand with balance transfers is they tend to have a one-off fee. So a 3% fee would mean if you shifted £1,000, you would owe it £1,030 to start, but that would be at 0% interest. So what you should be looking for of the choice of cards you've got decent acceptance chances of getting.

• 12:41Martin Lewis?

  Is you should be looking at the card that has the lowest fee in the time that you need to clear it. So shorter 0% deals tend to have lower fees. So if you could repair it off in under a year, you'll be able to get a no fee card. If you're not sure, just go long, because the fee is trivial compared to the interest you will be saving by shifting your balance and you may as well just get a card and go long and play safe. So just running through the current best deals on the market. TSB is the longest 0% card. It is up to, I'll come back to that, 38 months 0% with a 3.5% fee. Now, when I say up to,

• 13:25Martin Lewis?

  there are a number of cards out there where they have a headline rate and backup rates. And that means if you apply for an up to card, you could be accepted but not get the headline rate and maybe charged a higher fee. Most people will get the headline rate, but you're not guaranteed to get it. So I would tend to say if there is a definite card, a card that will always give you the 0% headline rate, and you've got high chances of that, I would probably hedge for the definite card over the up to card, because if you apply for the definite card and the eligibility calculator saying you've got a decent chance, you know if accepted, you'll get it. The longest 0% definite card is Barclaycard. These are often new cardholders, have to be a new customer. That's 36 months, so three years interest

• 14:10Martin Lewis?

  free with a 3.45% fee. But if you're shifting over two and a half grand, there's £20 cash back, which would effectively reduce the fee for you a little bit. Then there's one other card that's long, I would mention to you, which is the Virgin Money Definite 0% Card, 34 months 0% with a 2.95% fee. Just because it's only a couple of months shorter than Barclaycard, but the fees at 2.95% is a decent amount lower. And if you're not getting the cash back, because you're not shifting over two and a half grand, if you could, you know, many people could repay in 36 months could shift it so they could repay in 34, it might be worth it. Let's go to the other end now. The longest no fee card. Is Barclaycard up to 14 months 0% no fee, but it's an up to.

• 14:53Martin Lewis?

  The longest definite is Virgin Money, 12 months 0% no fee. All of them are 24.9% rep APR afterwards. All of them need a decent credit score, but there are lots of poorer credit balance transfer cards on eligibility calculators than Quiz Capital One, where you might get 18 months 0% and even if you don't have, even if you had CCJs in the past, as long as you've been behaving relatively well in credit sense in the last year or so, you might be able to get one. Golden rules, I'll just finish this off for belt and braces before we get into the questions. Golden rules if you get a balance transfer card, never, ever, ever miss your minimum repayment. If you do that, you can lose the 0%. So you might have just signed up for 36 months 0%. Second month, oh, I'm a couple of days late, you've just lost your 0% and it's gone on your credit file, it's a nightmare.

• 15:38Martin Lewis?

  So set up a direct debit to repay at least the minimum. Make sure you clear the card before the 0% ends and you plan your repayments to do so. If you couldn't do that in the end, then you could balance transfer it again. Do not spend, do not withdraw cash on these cards. These cards are specific use cards. They want you to spend or withdraw cash because that will tend to have a much higher interest rate. It usually won't be at 0%. So I would see this as a tool for a specific job to get rid of a certain amount of debt, almost like a credit card loan, although the repayments aren't fixed. And I'd actually suggest, I'm not sure I'm literally suggesting this, but I'm metaphorically suggesting that you contemplate it in this sense that you get your balance transfer

• 16:21Martin Lewis?

  card, you then get a bowl of water, you put your balance transfer card in the bowl of water, you put the bowl of water in the freezer so that you would have to smash the ice before you spent it because it is such a bad thing to do. Now, again, I'm not literally saying you do that, but that's what I want you to have the concept of it in your head of how you're going to operate it. And that is a step-by-step guide to balance transfers, how they work, what the best deals are and how to use them. That was the question, wasn't it?

• 16:46Speaker 03

  That was the question. Here's another question related to it from Vicky, who has two credit cards, paying off what she can each month, always over the minimum amount, then balance transferring to another credit card when interest starts to kick in. It just seems to be taking forever to pay off and I'm spending more than I think on the balance transfer fees. Any advice would be great. She's got about 6,000 on the cards.

• 17:09Martin Lewis?

  You are doing the right thing, right? It would be best if you hadn't had the debt in the first place, obviously, and we were being in this situation, but if you've got that debt, there is nothing cheaper than keeping it at 0%. The balance transfer fees are trivial. You know, the highest balance transfer fee is 3.49%. The interest on a credit card, the typical interest now on the go-to rate, once the 0% period ends, is 24.9%. So, you know, if you shift debt for three years and it costs you £35 per thousand, that's equivalent. Otherwise, you'd be paying £250 a year on the interest if you weren't paying it off. So, you're doing the right thing, but yes, the balance transfer fees will be there. You might want to look

• 17:51Martin Lewis?

  at going for slightly shorter cards. You know, you could get a 20-month card with a 1% fee, so that wouldn't be as much, and that might help you if you can power all the repayments to clearing it. But I know it's not what you want to hear, but maximize your repayments, keep it at 0%, even if you have to pay a balance transfer fee. That is the cheapest way that you can do it.

• 18:13Speaker 03

  Okay. Patricia Giddings says, "I own my own house and have an income of £14,000. Yet I can't get a balance transfer of 0% on debt of £9,000 on four credit cards. Why, when you have no debt, do they throw these cards at you?"

• 18:31Martin Lewis?

  So, I actually don't, I think the issue here is your income. It must be remembered there are two types of assessment done when you apply to get new credit. There's the credit score, which is the one everybody worries about and thinks about, and, you know, the credit reference agencies have their lovely systems and try and get you to pay £30 a month in come case, so you can see what's happening to your credit score, which is a basic assessment of have you been a good or bad credit citizen in the past, so a general lender can decide whether to trust you in future. But then there's probably the more important one in many cases, which is the affordability check. And your credit reference file does not include the most important fact that lenders are looking at when they decide to lend to you, which is your income.

• 19:12Martin Lewis?

  And that's on your application form. You've got nine thousand pound debt and fourteen thousand pounds of income. Now, you can hear from that lenders are going, I'm not sure we want to give her any more debt because she's only got fourteen thousand pounds of income. That was fourteen grand and nine, wasn't it Adrian? Yeah. It's only fourteen, it's only nine, she's got nine thousand pound debt and she's only got fourteen thousand pounds of income. How is she going to be able to clear it? And so you've sort of got stuck up to that limit. And this is what can happen now. I don't know whether you've checked everything. You could go onto an eligibility calculator and you may be able to get a poor credit balance transfer card. Your income is quite on the low side for this, you know, for doing it. If you get one, you might only get six or nine months zero percent. And then generally the go to rate afterwards might be thirty four, thirty five percent.

• 19:57Martin Lewis?

  So you'd only want to shift debt you're sure you could repay in that zero percent time. If that's more expensive than your existing cards afterwards, but that could give you the respite to start to work through this. It is a difficult one. Yeah. You're right. I mean, it's often said, you know, a lender or a bank is an organisation that will give you an umbrella when the sun's shining and taking you off, take it off you as soon as it starts to rain. I mean, people who've got lots of money can find it much more easy to get debt than those people who are really struggling. Which makes sense on a business side that makes is counterintuitive from a consumer perspective.

• 20:28Speaker 03

  Owen says, what's the cheapest form of borrowing between a consolidated loan? An overdraft and credit cards and how do you get a loan at a fair rate when credit is bad, given? By definition, you've got the higher amount to exist in debt.

• 20:43Martin Lewis?

  So let's put those in order. Absolutely the worst one in most cases is an overdraft. We're going to come to that later, way more expensive than credit cards and most loans. So therefore the choices between consolidating a loan and a balance transfer. The very simple answer is purely on rate, a balance transfer smacks the pants off a loan. Cheapest loan on the market is about six point nine percent and you'd have to be borrowing over seven and a half grand to get that and have a really good credit score. And decent income to be able to get that, you know, you've got thirty six months zero percent for a three point four four nine percent one off fee. On a credit card. So why do some people look at consolidating? Because in the real world, the problem for many people is the monthly payment.

• 21:26Martin Lewis?

  It's not which is the lowest interest, it's which can I keep the monthly payment up? And I would of course always say it's best to repay more as it clears your debt quicker, but I understand that isn't possible. And with larger debt on credit cards, the minimum repayments can be higher than the fixed repayments for a loan, which is why some look at consolidating card debts into a cheap loan to lower the repayments. The truth is though, if you've got a lot of debt and not a good credit score, you're only going to be able to get very expensive loans and it's going to cost you. So that there is a friction here between the amount, your cash flow, the amount of money you have to pay a month and the actual cost which is based on the interest. I would tend to urge people towards sticking with the balance transfer cards and doing

• 22:08Martin Lewis?

  it properly and making sure you're planning and budgeting to repay it because that is cheaper than a loan. If you could get a cheap loan to consolidate, that may make your life easier, but most people who are in that position will struggle. And honestly, if you're having these discussions, then I'm just going to throw to something that we were going to do later, but is incredibly important to understand. My, everything I'm talking about here is about how if you have a functional relationship with your money, you can reduce the cost of your debts and get out of debt. And that functional relationship, the fact you have enough money to be able to afford what you're doing is crucial.

• 22:50Martin Lewis?

  I have three questions I ask people when they're in this to decide whether it's functional or not, or whether you're in what I let's be blunt is debt crisis. Question number one, do you struggle to meet the minimum on three repayments? Question number two, is your total debt, not mortgage or student loan, over a year's salary? Question number three, do you have sleepless nights or depression or anxiety over debt? If you answer yes to any of those, struggle to meet your minimum repayments, total debt over a year's salary, sleepless nights or depression, anxiety over debt? I think you're no longer in that functional system and you should be looking for an entirely different solution and most of what I'm saying doesn't apply to you.

• 23:32Martin Lewis?

  And that solution is to go and get yourself one-on-one debt counselling help from Citizens Advice, Step Change, National Debt Line, or if you're struggling emotionally too and you're really finding it all very difficult, Christians Against Poverty, who is a Christian-based counselling organisation for debts. They do it because they're Christian, you don't have to be Christian to go to them, but they will give you a lot more time and look at your emotional needs as well and try and help you through it. Those organisations are not there to judge you, they're not going to tell you off, they're not going to say, "Who stupid fool, what have you done?" You're probably saying that to yourself. They won't do it. They are there to professionally help you organise and they have a lot more power to deal with creditors than you do.

• 24:14Martin Lewis?

  They can put in a breathing space scheme that stops creditors chasing you and holds everything. And the most common thing I hear after people have gone to those is, "I finally got a good night's sleep." But you do need to understand that the solutions they will offer will effectively take you out of the credit market. It will make borrowing in future more difficult for a time. So that's why, are you in that functional, "I just want to make it cheaper and repay it"? Or am I, actually, it's all gone too far, I just need help, this all needs to stop? And then you sort of do that, but it extracts you from the credit market for a time.

• 24:49Speaker 03

  Okay, a couple of quick ones before the news. Mark says, "When can you apply to be a new customer again, after taking advantage of new customer interest rate deals once the original one has expired?"

• 25:02Martin Lewis?

  It depends, innit? I think is my honest answer. Off the top of my head, Barclaycard, you have to have not had a Barclaycard in the last 12 months. Amex, you can't have had an Amex in the last two years. So the lengths vary depending on which the card company is, you can't be an existing cardholder with many of them. It's not as harsh as what counts to be a new customer for a bank account switch, you know, 200 quid, it's not that harsh. But it's normally a couple of years, I'd say. So if you haven't had a card with that firm for a couple of years, you will probably be able to get a new cardholder deal.

• 25:38Speaker 03

  Okay, let's, just one last one before the news.

• 25:41Martin Lewis?

  Yeah.

• 25:42Speaker 03

  What do you do, interest in this, what do you do when your credit card promotion ends? Do you clear the debt, close the account and open a new card? Will this affect your credit score negatively? Do you leave the accounts open but with zero or minimal debt to show you're not relying heavily on debt?

• 26:01Martin Lewis?

  There are a whole load of different factors that go into this. Some, some companies, when their credit score like evidence of longevity, some see that having too much available credit is a risk, others see that having a lot of credit that you're not using is a positive. It's not the biggest deal for your credit score. You might see it affected on the credit monitoring service score that you get, but remember the credit scores that you get from credit reference agencies aren't real, they don't really mean anything, they're just a loose indication of what a typical lender would think, whereas each lender actually scores you differently. So what I would probably do, there are a couple of cards out there like MBNA and Barclaycard, who tend to give existing customers balanced transfer promotional deals. They're not as good as new customer ones, you might, but they might write to you and say, hey, you could shift debt to us for 0% for a year.

• 26:45Martin Lewis?

  So if you had one or two of those cards, you might want to keep them just in case you wanted to do that in future and it gives you an extra facility. And the rest I would probably just for housekeeping get rid of in case you want to be able to get the new cardholder deals in a couple of years' time with the same cards. I mean, obviously, we want to wean people off credit card borrowing with the exception of Stoozers, which is where you are tactically and deliberately making money out of 0% debt by saving it at high interest, but that's only for the extremely financially savvy. I would say, you would, my qualification for what counts as extremely financially savvy, I want you to be getting at least 75% of the Money Mastermind questions correct. If you're doing that, then you're probably in the Stoozing world, if you're not, then you're more in the Adrian world and you shouldn't be touching it.

• 27:28Speaker 03

  Okay, I'll take that one on the chin, as I always do. It's what I meant to ask you, I've been talking to a couple of people over Christmas, in advancing years, and they were talking about their debts and they, and I realised they were making the assumption that, you know, these debts would die with them.

• 27:45Martin Lewis?

  I think that's...

• 27:46Speaker 03

  So it didn't matter having debt. What, what do we say about that?

• 27:52Martin Lewis?

  I think that's an incorrect assumption. In the UK, debt doesn't usually die with you, but it isn't inherited by your family either. So the best way to think about it is your debts are paid from what you leave behind, not passed on to your family. So your estate will still be liable to pay your debts, you know, whether it's your credit cards or your loans or whatever it is. But so it'd come out of your estate and then what would be passed on is what is left. If you didn't have enough in your estate to pay the debts, then nothing would be passed on to your inheritees, but they wouldn't owe the remainder either. Now, clearly, if you've got a guarantor loan or a joint loan, or there can be other structures, we're just talking about single loans there. So that's the basic idea. And

• 28:37Martin Lewis?

  I bet, Adrian, and let's not oust out your friends too much, I'm guessing your friends, do they own their own homes?

• 28:44Speaker 03

  I think there's some mortgages involved.

• 28:46Martin Lewis?

  But but they've probably got, if you see what I mean. So there's probably equity in there and there's money in there. So it would come off the estate. So the idea that they can run up debts willy nilly and it'll all be fine when they die because it won't be passed on, well, it will still, it will mean their their inheritees will get less.

• 29:05Speaker 03

  But I mean, look, we've got to be careful going down this road. But what I understand then, and there are a lot of people are in a position where they don't own their own place. So they've got nothing to leave anyway.

• 29:16Martin Lewis?

  It is, it is a very complicated scenario. I wouldn't say people don't have, there are many people. And obviously, it tends to be financially that those who don't own their own place or don't have a mortgage are unable to get as much debt anyway because of the way that the credit scoring process works. You cannot be absolutely certain this is all factored in when you're being credit scored. But yes, there will be someone out there who has run up lots of debts and has no assets and who therefore and then passes away and that's it.

• 29:45Speaker 03

  Okay.

• 29:46Martin Lewis?

  But I wouldn't, I wouldn't, I wouldn't get into the, into the brain set of thinking your debt dies with you.

• 29:50Speaker 03

  No, absolutely. We're not, we're not advising this as a strategy.

• 29:52Martin Lewis?

  No.

• 29:53Speaker 03

  Is, is, is what we should say. Um, right then, so where shall we go now? I think we're talking, we're talking overdrafts. We're talking overdrafts, aren't we?

• 30:05Martin Lewis?

  Yeah, so I'm going to do my, I'd like to do my impression of how I feel about overdrafts.

• 30:09Speaker 03

  Okay.

• 30:10Martin Lewis?

  Woo, woo, woo, warning, warning, warning. I said this earlier, overdrafts are probably the most dangerous form of mainstream debt out there. And people don't even think of them as a debt.

• 30:23Speaker 03

  Worse than credit card debt.

• 30:25Martin Lewis?

  Oh, yeah. But I mean, this is the interesting thing. People think credit cards bad. Debit cards, ding, good. But if you're overdrawn, it's credit cards bad. Debit cards, worse.

• 30:38Speaker 03

  Hmm.

• 30:39Martin Lewis?

  Almost every UK bank's interest rate on its overdraft is 40%. A typical high street credit card that you haven't got a 0% deal on is 24.9%. So therefore the overdraft is costing you, you know, 60, 70% more than the debt on a credit card. And what really I want to ramp in on this is there will be people out there who have credit card debt at 24.9% and they have an overdraft and they're going, oh, I need to pay my credit cards off. I'm going to try and put as much as I can to pay my credit cards off, but they're doing it out of their overdraft. So they're clearing a debt at 24.9% to borrow more at 40%. It's absolutely crackers.

• 31:22Martin Lewis?

  And if I go back to my very beginning of the show where I structured this as you need to repay, line everything up in order of highest cost and repay the most expensive, for many people that will be the overdraft. So you have to think of an overdraft like a debt. And when we talk about repaying it, what do I mean by that? Well, let's say you're 500 quid overdraft, overdrawn. And your aim is to repay 100 quid a month. At the start of next month, you want to be 400 quid overdrawn. And the month after, you want to be 300 quid overdrawn. And you want to do that as a rigorous system. But because of the, the nature of the way overdrafts works, it, it's very conceptually difficult for people to grasp hold of that. So let me give you a few other solutions just quickly on overdrafts.

• 32:02Martin Lewis?

  First Direct is currently offering new switches £175 and it has the biggest interest-free overdraft on the market, which is £250 interest-free that most, not every every new applicant gets. So if you had a small overdraft or you're the type of person who dips into their overdraft on occasion, which is still very expensive, you're you're this is a good account for you. So let's just imagine someone's got 400 quid overdrawn, the £175 pays some of that off, you now owe 225 quid, that's within your 0% limit, it's interest-free. There's Club Lloyds that pays you 250 quid for switching at the moment that has a smaller £100 0% buffer zone for people who very rarely do large overdrafts, may well be worthwhile. Otherwise, okay, deep breath, getting complicated, you can

• 32:45Martin Lewis?

  look at shifting your overdraft on to a 0% credit card, because obviously 0% is a lot cheaper than 40%. There are two methods to do this. The first is conceptually the best one, which is a money transfer credit card. There are very few of these available. It's a bit like a balance transfer I described earlier. A money transfer is when you get a new credit card that pays money into your bank account for you, so effectively clearing your overdraft and you now owe the credit card at 0%. Best on the market at the moment is Tesco, 14 months 0%, but with a 4% fee. And so as you can see, it's not that long

• 33:26Martin Lewis?

  as 0% and there's still quite a hefty fee on a short 0%. An alternative strategy, Adrian, hopefully you'll get this, so is to use a 0% for purchases credit card, but this is only for people who've got financial discipline and they trust themselves on their spending. And hopefully, you know, if you've got your, that will be people who originally got a credit card for a deliberate one-off purchase that was budgeted for. But if, so here's what you do, right?

• 33:54Martin Lewis?

  Let's imagine you've got a thousand pounds on your overdraft. You get yourself a 0% for spending card that lasts 25 months, 0%. You then spend on the credit card. And you do all your normal spending on the credit card. So what happens to your bank account?

• 34:14Martin Lewis?

  If you're now spending on your normal money on your on your credit card?

• 34:17Speaker 03

  Well, it stays where it is.

• 34:18Martin Lewis?

  And and your income goes in and starts to clear the overdraft. Because you're not spending from your bank account, you're spending on the credit card. So you're effectively building up 0% debt on the credit card. Which means you're paying off your overdraft. This is an indirect way to transfer your overdraft to a 0% credit card. The reason I say it needs financial discipline is it is not an excuse for spending more. It should rigorously minimise your spending. Once you've cleared the overdraft, you stop spending on the 0% card. And you make sure you have the repayment so you can clear the 0% card. It's just a way of cutting the interest. It is not a way to give you access to more cash that you shouldn't be getting or shouldn't be borrowing anymore. And then you you need to follow all those balance transfer golden rules that I said earlier. Couple of one final trick on overdraft for people. It's not always that easy to do, but it's worth looking at.

• 35:03Martin Lewis?

  If you're regularly overdrawn at the end of the month. See if you can shift your direct debits to just before payday. It means you will not be overdrawn as heavily during the month. And it will save you money just by shifting the payment dates.

• 35:18Speaker 03

  Okay, Keith says, how is it okay to charge a pound a day for an agreed overdraft? Surely this should be cheaper if you agree it in advance?

• 35:28Martin Lewis?

  Agreed overdraft is just is just your overdraft facility. Look, I have real problems on what go on with overdraft. It used to be that you were charged a fee and it'd be a daily fee with some banks irrespective of of the interest. And that would be very expensive for small overdrafts, but far cheaper for big overdrafts. And then, I mean, I think it was at the start of the pandemic, so it must have been around 2020. The regulator decided it was going to ban fees and make sure that all overdrafts had to be done on an APR rate. And this was done to improve competition and to improve transparency. I was not in favour at the time and it resulted in this blanket, this standard, and it's unbelievably standard, there are only a few who don't do it, new 39.9% APR cost of overdrafts.

• 36:12Martin Lewis?

  There is very little competition in the overdraft market. There's a few challenger banks at 20 or 30%. But I mean, effectively, we just have this standard 40% charge. Now, you say, how's it fair to charge a pound a day for being overdrawn? Well, they don't charge. It's an interest rate. So if you're a penny overdrawn, it won't cost you very much. But if you're three grand overdrawn, it's going to cost you a lot. And that's the way that it works. Is it fair? Doesn't really matter, does it? They can do it. It's legal.

• 36:38Speaker 03

  Can we just go back and talk about buy now, pay later? I'm really interested in this. I'm getting bombarded with it, you know, on bid of these buy now, pay later offers.

• 36:47Martin Lewis?

  Yeah. Well, look, buy now, pay later is a debt. It seems like it's a lifestyle choice and in the early days it was marketed as such. It is very easy to do. It's the ubiquitous, every time you pay for something, hey, don't pay for it. Why not spread it into three easy repayments and interest free? It sounds great. Now, here's a couple of problems. Why? How does the business model work? Why would they have buy now, pay later if it's interest free? The answer's very simple. Shops pay, they like it because people spend more. The fact that this encourages spending and it encourages people to spend things they cannot afford, that's why I've always been concerned about it. And I lobbied for regulation. That regulation comes in July, so it's worth understanding buy now, pay later is not currently regulated.

• 37:31Martin Lewis?

  If you don't, if you fail to repay, it can hit your credit score in certain circumstances and they can chase you for debts and you can't go to the ombudsman yet because it's not regulated. But that will be changing from July. Having said that, if it's for a planned, deliberate one-off spend that you need to spread the cost, it is interest free and it works. So I'm not anti it, I'm just anti the, some of the flaccid nature of the way it's been regulated, operated and marketed. So what can I tell you? It's interest free, I can't cut the cost. But for people who are struggling right now, most of the big firms do have options to delay repayments, though do be aware if you delay your repayment now, this can reduce the gap between the next payment, so your next payment's going to come quicker.

• 38:15Martin Lewis?

  So although it might help you get over that old January hump where you're paid early in December and later in January, none of these first step repayment delays will impact your credit file. You've got Klarna, which is called Extend Your Due Date by up to 10 days, Clearpay is called Move Payment, PayPal's Paying Three is called A Payment Holiday, and Zilch is called A Snooze, but with Zilch you have to pay to do the snooze. A couple of them do have more substantial help mechanisms for those who really can't pay to delay payments longer. That will tend to stop you using them in future and also will have an impact on your credit score. But if you are struggling with those, you could delay the payment a few days at the moment that might be able to help you. But also, I would

• 38:58Martin Lewis?

  say, remember, buy now, pay later is a debt, and it should be treated with the seriousness when you get it out and the non-impulse-based decision of any other debt.

• 39:11Speaker 03

  Shall we do a few tell-uses?

• 39:12Martin Lewis?

  Yes, you start because I need to change page.

• 39:15Speaker 03

  Okay, so this is, we want your realistic new year money goals.

• 39:21Martin Lewis?

  Yeah, not resolutions. Resolutions last about as long as the turkey after Christmas. These are goals. What have you got in your head? It's a better way to think about it, I think.

• 39:30Speaker 03

  Okay, Louise says, I'm planning to put some money aside each month to pay for Christmas this year. Sensible.

• 39:36Martin Lewis?

  Christmas, typical cost for a family, 800 quid. So you know, put 60 quid aside a month rather than trying to pay it all out of December will mean a lot less stress at the end of the year and a lot less risk that you had to borrow for it. Well done, Louise. Fiona Bowey, pay off debt, two loans finished this year, and build up an emergency fund. Very sensible. Not doing well so far, waiting for locksmith for my back door. See, that's why you would have an emergency fund, as the handle mechanism went on Saturday. Sorry to hear that. But the emergency funds are crucial. Debt and saving are two sides of the same coin. With debt, you pay for something, then you give the money, the bank money each month afterwards, and it charges you interest. With savings, you pay for something each month in advance, and the bank gives you interest, and then you pay for it. It's

• 40:21Martin Lewis?

  the same thing, opposite way around. You're far better off to be saving for something and then having an emergency fund to pay.

• 40:27Speaker 03

  Okay, Natasha Smasher says, someone with ADHD, I'm trying to get a grip of my finances. Setting up a DMP for outstanding debts.

• 40:36Martin Lewis?

  Debt management plan.

• 40:37Speaker 03

  Okay, set up a small standing order to save with my community bank. It's not as easy to get that. Start shopping at low cost places, healthy little for big shop. More use of community fridge, continue with bulk cooking, stick to shopping lists to minimise impulsive spends. Done fifty two this year, I want to be in a better place leading up to retirement. I'll never be wealthy, but I'd like to stop living by the seat of my pants. We salute you, Natasha.

• 41:02Martin Lewis?

  We do salute you, Natasha, and money management can be tough for those people who have ADHD. Many people have been in touch and talked to me about those issues in the past. So that sounds like a really good and strong list. The only small critique I would make is while it's absolutely right to be looking at saving, if those debts are expensive, you may be better to try and get rid of the debts first. Just because the saving is not going to gain you what the debts would. Although I understand why psychologically you'd like to have a little savings emergency fund to stop you in future. But well done and I wish you the best and I hope you have a wonderful twenty twenty six and you achieve all of those goals.

• 41:37Speaker 03

  Okay, do you want to do Vicky?

• 41:39Martin Lewis?

  You do, Vicky.

• 41:40Speaker 03

  Vicky in Cambridge, I'm having a no spend year. I've joined the National Trust so I don't go shopping. I take my lunch and coffee with me to save money. And just those, I mean, I dread to think what I spent in in in coffee every year. And you've said in the past, you know, adopt your daily spends.

• 41:59Martin Lewis?

  Well, here's here's the here's the magic number, right? There are a number of magic numbers. You have, let me try and remember them.

• 42:08Martin Lewis?

  Twelve.

• 42:11Martin Lewis?

  Fifty two. Two hundred and fifty. And three hundred and sixty five. You know, three of them.

• 42:19Speaker 03

  Yeah.

• 42:19Martin Lewis?

  The two fifty is a typical.

• 42:21Speaker 03

  Working days.

• 42:22Martin Lewis?

  Working days. So if you buy a coffee on your way to work every day and the coffee costs you four pounds, that's a grand a year.

• 42:29Speaker 03

  Aye, aye, aye, aye. I bought two today, I can't say.

• 42:33Martin Lewis?

  Two grand a year. Oh, yeah. So, I mean, that's just, that's where we put it into expect. Now, Vicky's interesting, no spend year. I mean, that's very difficult to do a no spend year. One of the ways people find really helpful is to have no spend days. So, when you pick the day of the week, you pick like a Tuesday and a Thursday and you say, I am not going to spend any money today. You might need transport for work, but you know, I'm not going to spend any money on a Tuesday and Thursday. And it can be habit forming. I had a problem called Extreme Savers once where we tried this experiment with people who wanted to cut back. And they found that having no spend days really gave them, where they were absolutely fixated on those days of not spending, really helped their overall money situation.

• 43:10Speaker 03

  This is the time of the show when I start asking you more questions in the hope that you'll forget about Mastermind.

• 43:15Martin Lewis?

  Play the theme tune.

• 43:22Martin Lewis?

  Adrian, welcome to the first Money Mastermind of 2026. The score stands at you have got 15 right and 28 wrong in this three option multiple choice quiz, which means that you are currently

• 43:41Martin Lewis?

  just better than random chance. Now, the score doesn't reset at the start of this year, but I'm going to keep a separate tally for the new year as well. So you could sort of see this as a fresh start for you to be absolutely smashing random chance and make me just have to make a new sting that says smashing the pants off random chance. S T P B R C. And Adrian, as it's a new year, I'm going to do this differently.

• 44:03Speaker 03

  All right, okay.

• 44:04Martin Lewis?

  No more roast based questions. I'm not sure that's going to last, but today at least. Instead, let's imagine

• 44:14Martin Lewis?

  that you briefly, fleetingly, absolutely nailed it. Yes, you had a real touch of financial genius 10 years ago. You invested £10,000 in the Biff Tannen Future Tech Fund that didn't just perform well, it was full flux capacitor. Today, that £10,000 investment is worth £55,000.

• 44:39Martin Lewis?

  And you've decided, and who can question your judgment, having made such a good decision in the first place, you have decided to sell it. So you bought a fund for £10,000 a decade ago, you sell it today for £55,000. Which of these correctly describes the tax situation? For ease, we're going to assume you haven't bought or sold any other funds or any other things that attract capital gains tax over the last 10 years. So you're with me, Adrian?

• 45:03Speaker 03

  Yeah.

• 45:04Martin Lewis?

  Is it A, you pay capital gains tax on £47,000, which is the £50,000 you gained, sorry. I've just realised, I altered the question, got the numbers wrong, I'm just going to have to just, I'm just talking to myself. You pay capital gains tax on £42,000, which is the...

• 45:25Speaker 03

  I'm loving this. Oh, this is one of the best days of my life.

• 45:30Martin Lewis?

  I'm changing the question, everybody!

• 45:32Speaker 03

  It serves you right. It serves you right.

• 45:36Martin Lewis?

  Okay, Adrian.

• 45:38Speaker 03

  He's worse than random chance listeners, he can't even figure out his own questions with which to torture me.

• 45:44Martin Lewis?

  So Adrian, you bought it for £5,000 a decade ago and you sold it for £55,000 today, okay?

• 45:52Speaker 03

  Right, not £10,000. So I bought it for £5,000 and I sold it for...

• 45:57Martin Lewis?

  I'm actually blushing. I rib you every week on this and I've just absolutely gone...

• 46:02Speaker 03

  I bought it for £5,000 and I sold it for £55,000. Is that right, or are you going to change that again?

• 46:07Martin Lewis?

  Correct, so you made, you made a gain of £50,000.

• 46:10Speaker 03

  Right, okay.

• 46:11Martin Lewis?

  So here are the three options. You pay capital gains tax on £47,000, which is the £50,000 gain minus the current £3,000 capital gains tax allowance for the year. B, you pay capital gains tax on £41,000.

• 46:32Martin Lewis?

  Which is the £50,000 gain minus the current £3,000 allowance. And you've carried forward up to two years of previous unused allowances, making it £9,000 that you can offset. So the gain that you're taxed on is £41,000. Or C, you pay capital gains tax on £20,000. Which is the £50,000 gain minus this year's £3,000, which is the annual allowance. And you get that for each year that you had the investment. So you effectively get 30 grand off. So you're only paying capital gains tax on 20 grand. So I'll summarise the three options without doing the numbers. The first one is you just get this year's capital gains tax allowance.

• 47:14Martin Lewis?

  The second one is you can carry back the past capital gains tax allowance for two years. And the third one is you get the capital gains tax allowance for every year that you had the investment. Are you on your phone?

• 47:24Speaker 03

  I am, but not for that. Somebody just texted me, asked me if I want a cup of tea. So, and the answer is yes.

• 47:31Martin Lewis?

  Okay.

• 47:31Speaker 03

  It's not a multiple choice. It's nice to be asked a straightforward question.

• 47:34Martin Lewis?

  You don't get a point.

• 47:35Speaker 03

  Okay, um, I wish I knew what the... I should, I just, I don't know the capital gains tax. I mean logically, I'm gonna, I don't know, but logic, so I'm gonna go for how I think. What should be sensible, even though I know that's probably wrong.

• 47:51Martin Lewis?

  So you've had the investment 10 years?

• 47:53Speaker 03

  Yeah, and it seems mad. I mean, it seems, it seems mad to pay all, you know, all the capital gains tax allowance just on the year.

• 48:04Speaker 03

  In which...

• 48:04Martin Lewis?

  The year it crystallises.

• 48:06Speaker 03

  Well, so if you'd bought it in the same year, you bought it this year for 5,000 and sold it for 55,000, then, you know, you should, yeah, then obviously only the 3,000 allowance applies. So I think it's C. I think you can carry over.

• 48:23Martin Lewis?

  I think, no, that's probably wrong. No, I think it's B. I think it's the one in the middle. Well, you get two years that you can carry forward. Yeah, yeah. Okay. Well, you certainly can carry forward losses. So if you'd had losses in previous years, you may be able to offset the gain in this year. But we did say in the question that you hadn't, you couldn't do that because you'd had no price sales or anything else that attracted capital gains tax. But how would you have carried over losses if you, you, you, the loss hadn't been crystallized because you still had? No, you're not, not losses on this. You might, it, it, so if you had sold an investment at a loss last tax year. Yeah. So you were down 4,000. You could offset against this year's gain. Okay. Do you see what I mean? Yeah.

• 49:04Martin Lewis?

  So, but you cannot carry forward your capital gains tax allowance. So give me another. You, the answer, correct answer is A. You pay capital gains tax on £47,000, which is £50,000 gain minus the £3,000 capital gains tax allowance for the year you sold it. And that's why I have done this question, so people understand that. Now, this is one of the reasons why shares ISAs are so powerful in a way compared to a cash ISA. Because in a shares ISA, you don't pay capital gains tax. If you'd bought that in a shares ISA, you would, you wouldn't pay any tax on it at all. And while most times you put money in savings,

• 49:45Martin Lewis?

  you get interest each year so that it then goes to that year's allowance. If you're buying something that's a capital gain, it's all crystallized at the point of sale. Now, there is a way you can do a thing called bed and breakfasting, which is when, so let's say last year, you could have sold that investment and then waited 30 days and bought it back. And that would have crystallized whatever position you were in last year. And then you bought it back and it carries on like it's a new investment at that point. But outside of an ISA, it can be really expensive. And basic rate income taxpayers pay 18% gains above the annual exempt amount. Higher or additional rate taxpayers pay 24% gains. So if there were a choice, and people don't necessarily do this, but if you had a choice between a cash ISA and a shares ISA,

• 50:29Martin Lewis?

  and you had some shares that you were hoping were going to grow, well, because of the way this works. If it's a substantial amount, you want to be protecting it in your shares ISA. Because all of the gain, it is all about the tax year that you crystallise the gain. How long you've had the investment doesn't matter for those purposes. It's quite staggering, isn't it?

• 50:46Speaker 03

  It is quite staggering, informative as ever and enjoyable. My favourite moment ever since we've been working together when you got something wrong in your question to me.

• 50:56Martin Lewis?

  You're going to make sure that goes in the best of stuff we do next Christmas, aren't you?

• 50:59Speaker 03

  It's going to be my ringtone on my phone, that is.

• 51:03Martin Lewis?

  Right, well, that's the main bit done. I'm now in the pod extras bit with podcast producer Matt. Happy New Year, Matt. Happy New Year, good to be back. Can you believe I got the mastermind question, I messed it up? And I just gave Adrian that opportunity that he's long been waiting for. It was perfect. It was almost like it was a little present to Adrian. Oh, but his little face when you did it, he loved it. I know, I'm so gutted. I tell you what happened. I mean, this is probably very boring for everyone listening, but I'll tell them anyway. So we record the podcast on a Thursday lunchtime, as you'll know if you listen to Five Live. Normally Thursday lunchtime, Thursday morning, I get up and I go through the podcast and just have a final check of, you know, the mastermind question and everything before I go.

• 51:47Martin Lewis?

  But I was on this morning, on ITV this morning, which I don't normally do, but they've moved studio and they wanted me to go in, so I did it for them as a favour. And I didn't have time to do the question read. So I hadn't done my usual quick read through of the mastermind question beforehand. And you see, proper preparation is always needed, no matter who you are. So, you know, when I do the podcast, the answers to the questions, I mean, that's my job, that's my stocking trade. But trying to deliver the podcast, the question, the mastermind question, make all that work, is something that I do do check on and I got it wrong. Ah. Anyway. Anyway. We've still got one element, one element left, haven't we, that we haven't covered? We do, we need to cover loans.

• 52:31Martin Lewis?

  So I think we've got some questions on it. Let me, let me just talk you through the basics of cutting the cost of existing loans. Because everything I'm talking about today is cutting the cost, it's not about new borrowing. So we've had rate cuts, four rate cuts over the last year in the UK in 2025. And on the back of that, loan rates have improved a smidge, a tad, a soussant, if you like. So if you've got a loan, it is worth doing a five minute check to see if you can cut its cost, especially if your creditworthiness or income has improved since you got it. It isn't the simplest thing to do. I'm going to try and talk you through the stages.

• 53:12Martin Lewis?

  The very raw stage to see if it's worth doing though is, are the cheapest loans on the market now, and this is for those with a better credit score who are able to get, tend to get the cheapest loans, cheaper than what you currently have? So to run through very quickly, for up to £3,000, Zopa is 9.9%. For £3,000 to £5,000, Navuna is 9.7%. For £5,000 to £7,500, M&S Bank, Santander and Tesco are all 6.9%. For £7,500 to £25,000, M&S is 5.8%. So those are just scales and magnitudes. Don't worry about the actual bank. You'd want to go onto an eligibility calculator here too. Remember, as always with loans, those rates are representative APR,

• 53:54Martin Lewis?

  which means sadly only 51% of accepted customers need get that rate. So you might apply and find you get more and it's very difficult to sort that through. So if you find that you're going, yeah, that is cheaper than the loan I've currently got. I've got an A, B, C for you. A, ask your current lender for a settlement figure. That's how much it would cost to clear your current loan, including any early repayment charges now. And that tells you how big a new loan you will need to get in order to clear it. So A is your settlement figure. Then B, you need to find your cheapest loan for that settlement figure. So then you go onto an eligibility calculator and see what your chances are of getting one of those cheap loans for the amount of borrowing that you need to clear.

• 54:39Martin Lewis?

  The first one, to clear the settlement. And then C, you need to compare the new loan. To what you'd pay on the current one. So multiply your monthly payments and how many months you have left on the current loan, ask the lender if you don't know, to find how much you'll pay if you'll stick, then compare that with what the costs will be on the new loan repayments over the same term. The new loan is cheaper over that period, factoring everything in, it's worth switching. If it isn't cheaper, you may as well stay where you are. And hopefully that makes sense. It's an ABC, and you have to follow that because there can be early repayment penalties if you clear an existing loan.

• 55:16Speaker 04

  Right, got it. Do you want some questions from listeners?

• 55:19Martin Lewis?

  Always. As long as they're good ones that I can answer.

• 55:21Speaker 04

  Two good ones for you. Starting with Joanne. She says, we have two loans, one's been overpaid, one's not. Two credit cards, one's at 0% interest, one is not. I don't want to be paying debt off for 10 years, so haven't looked at a consolidation loan, but I do want to ensure these are paid off quicker and ideally with no interest on any of them. Do you have any suggestions?

• 55:42Martin Lewis?

  It's going to be very difficult to shift a loan to a credit card. So I mean, there are ways to do it. I talked about money transfer cards earlier, but that's only 14 months, 0%, and you might not get the level of the credit limit. So first of all, get the other balance transfer at 0%, that's your easy win. So with the card that isn't at 0%, get that to 0%. With the loans, you can go through the process I've just talked about, seeing if you can cut the cost. If they're relatively small, then you might, if you can repay them really quickly, be able to put them on a money transfer credit card and shift the loan to that. I think it's going to be tough. I think with the loans, you're going to have to accept that you're going to pay some interest. The credit cards, though, you should be able to shift to 0%. And hopefully, everything I've talked about

• 56:24Martin Lewis?

  in the podcast so far will have tooled you up in order to know what to do with that.

• 56:29Speaker 04

  And Catherine asks, what's the difference between a secured loan and an unsecured? And what are the cons to secured loans?

• 56:36Martin Lewis?

  Okay, so it's a really interesting question. We hear this word, secure, and it's sort of like you think, security. But actually, a secured loan is security for the lender, not for you. And what it means is, in the event that you can't pay, it is far easier for them to take your home because it's secured on an asset. Generally, it's secured on your home. It can be secured on other things in some circumstances. So the classic example of a secured loan is a mortgage. A mortgage is a loan on your property, which, if you can't repay, they can repossess your home and they own your home. Now, when we talk about secured loans in the market, they tend to be what's called second charge. So they have a secondary charge on your property.

• 57:21Martin Lewis?

  Your mortgage is first charge, so the mortgage would be paid first, and then these would be the second charge. Secured loans tend to be longer loans than normal, standard personal loans, the ones I've talked about, which are unsecured loans. Everything else remaining equal, same loan, same interest rate, same length, you want an unsecured loan. I mean, it is not impossible, they can take your house on an unsecured loan, but it's incredibly difficult for them to do so through our court process and such. The advantage of secured loans, it might be easier for some people to get, those who own a property. They can often be over longer terms, and the interest rates depending can be cheaper. But you have to be aware of the risk. It's also worth noting that if you have a second loan on your home, it can make selling

• 58:05Martin Lewis?

  it or getting a new mortgage tougher if you have that second loan. So all of those need to be weighed up. Generally, if you're just looking for £5,000 for a planned budgeted for one-off, you would look at an unsecured loan. And I think that is where we're done on debt cost cutting. If you've got further questions, even though we won't be doing it in the main pod, of course, we have the Question Time pod that we put out every Monday. So if you want and you've got questions on the back of all that, then just email to [email protected] and we might answer it in the Question Time pod, which is me and you, isn't it? It is. That's our double header there. And Matt, I'm done on debt busting for today. I love the tellers. Shall we do a couple more tellers before we finish? Yeah, let's do it.

• 58:49Martin Lewis?

  Tellers, you will remember, was, what are your realistic new year money goals and how do you plan to achieve them? And I think, Matt, let you start. You can do the first one.

• 58:59Speaker 04

  Okay, Laura, we have a few financial goals this year. Number one is to bring the mortgage down to below £300,000. Number two is to increase our emergency funds to £1,500,000. And number three is to start planning for Christmas earlier, she says in September, and set clear budgets. I'm not entirely sure why we've always waited till December to get everything when Christmas stuff is out in the shops from August.

• 59:22Martin Lewis?

  Five fingers crossed you get there, Laura. All sounds very sensible. Mick, I'll finally be in a position this year to have less bills and more scope to save the full amount of my lifetime ISA up to £4,000 a year, a 25% boost on top for first-time pass, aged between 18 to 39. But do remember, if you're buying a property over £450,000 and you would have to have a penalty to pay your money, take your money out. Getting on the— that was me, not Mick. I think you realise. Getting on the property ladder is my main priority with the next five, six years. Good luck to you, Mick, on that one.

• 59:52Speaker 04

  Annie, honestly, this year, I'm not setting any. People probably laugh when they see this comment, but I'm so sick of planning and planning because stuff happens and money gets messed up, yet somehow I always make it through. I mean, we wouldn't do half the stuff we do, having kids or animals, if we fretted about money. Live within means where I can and occasionally push the boat out. I refuse to worry about money any longer. I've worried about it for 35 years, no more.

• 1:00:15Martin Lewis?

  Oh, Annie, I struggle with that one, I'm afraid. I'm sorry. I don't want you worrying about money. The whole point of what I do is to try and improve net happiness by reducing worry and making sure people's money stretches further. But the idea is it'll always sort itself out. Planning and planning is important in money. It is a job. It's a job of home admin. It's not a particularly enjoyable one, but it is worth taking the time to do it. Making sure that you have an emergency fund is absolutely crucial, assuming that you're not in debt. So I get you're not going to fret about money. I get you're not going to plan the big things. But making sure that everything is in place and you're not paying massively over yards for your bills, you know, I said this on my telly show the other day.

• 1:00:58Martin Lewis?

  Often, when I go— people who haven't really sorted their finances out, and you go and look at it, just by cutting their bills without anything that actually changed their lifestyle, they can often save over a grand. You know, clearly, those are not people on the very lowest of incomes. Those are people who have reasonable incomes and just have all the— you know, they have their mobile phones and their broadband and all that, and they don't bother churning and changing their bank accounts. Now, if we say— A thousand pounds. And if you took a day off work to save a thousand pounds, a day off work to sort my money, no, heaven forbid. But, but think about this for a second. If you took a day off work and it was lucrative enough to save you a thousand pounds and also get your, you know, your pensions and your tax and your power of attorney and your wills and get everything done and everything in order. Well, how many people earn a thousand

• 1:01:43Martin Lewis?

  pounds a day at work? You know, a thousand pounds a day, let's say you work 250 days a year, that's 250,000 pounds a year. Let's put, think about the tax that you'd pay on that. You would need to be earning 450,000 pounds a year before it didn't add up to take a day off work if you could save a grand, if, if you never normally do it. So, so I get your point, Annie, but I mean, hey, my whole profession is about saying the opposite and I'm not going to change it just to be nice. Shall, shall we do a final one on that? Yes. So we'll, let's move off Annie and me having, me having, you know, punch up with our, with our tellers contributors. Go on then, you pick one. Samantha, to save, save, save, I have a big, big, big in capital letters, home improvement due either this year or next year, and I want to save as much as possible

• 1:02:27Martin Lewis?

  to reduce the amount I need to borrow. Looking at a 20,000 pound plus bill and I would rather save up for it than get a loan. Quite right Samantha, wish you the best on that one. And you do the last one, Matt.

• 1:02:36Speaker 04

  From Suvi, I intend to save less. I think I have enough savings. Do I need to realign my financial attitude? I save a lot and plan heavily for the future since having children. I need to enjoy some spending on things before my kids are adults and my body's too tired to enjoy it.

• 1:02:51Martin Lewis?

  Do you know what, Suvi, you, you might be surprised, but I don't really have a problem with that. If you've got enough in savings and I hope you've, you're looking for the future, you've also thinking about doing some investing with that too, because over the long term, if it's money you don't need, then investing would be worthwhile. My whole remit, right, I remember years ago, someone, I, I was a TV presenter and they said, oh, you're gonna hate me. I just flew to New York on Concord and came back on the QE2 or whatever it was. It probably wasn't that, probably wasn't that long ago, but you get, you get the point that I'm making. Right? And, and, and I said, Why would I do that? If you check you can get it the cheapest possible and you could afford to do so, I don't have a problem. My philosophy is about maximising the utility of your money. And if you've got savings and you're protected and you're investing for the future and you're

• 1:03:35Martin Lewis?

  financially secure, well, yeah, and you want to spend it and that will give you more enjoyment and not cause you any stress and you're checking whether it's the cheapest price possible, do it. I mean, it goes back to the fact that I have two money mantras, right? I have a money mantra for people who are skint and a money mantra for people who aren't skint. The one for people who aren't skint is, will I use it? Is it worth it? Have I checked whether it's available cheaper elsewhere? And so, will I use it? If you're not going to use it, you shouldn't be buying it even if you've got the money. Is it worth it? This is the crucial one. What is the gain? What is the utility that you'll get from it? You know, it might be that, do you know what? I could spend £500 on that, use it once, but I could use the money for so many other things I would enjoy more. And have I checked whether it's available cheaper elsewhere? Well, I am the Money Saving Expert.

• 1:04:20Martin Lewis?

  So Suvi, have a great year. And I think that's a good place to stop.

• 1:04:27Martin Lewis?

  And that's it for this week, though not this year. Two podcasts a week, that's what we'll be doing. If you've enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast and why not subscribe? Then your pockets will be pleased with you too. We tend to put out a new episode every Thursday and the other pod is on a Monday, our Question Time podcast, where you can ask me absolutely anything and everything within reason. Just send your questions to [email protected]. And if you haven't enjoyed it.

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