Martin Lewis has revealed a genius method to pay off your debts much faster.
With Christmas just days away, many UK households will be seeing their credit card balances rising as they rush to grab last minute presents and make their money go further.
But the downside of credit cards is of course, having to pay the money back.
And for people with multiple debts, or several credit cards, things can quickly get away from you if you’re not careful.
Now, Money Saving Expert founder Martin Lewis has revealed his “snowballing” trick to clear away debts in the fastest possible time.
He told listeners of The Martin Lewis Podcast on Spotify and BBC Sounds: “The pecking order to pay off your debt, in my view, is very simple. List all of your debts in order of the rate of interest.
“And then throw all of your spare cash at paying off the one with the highest interest rate.
“For the very simple reason that that is growing most quickly, assuming you are allowed to pay more on that, pay more on the one that costs you the most.
“Many people pay them evenly or they pay the biggest one. Just pay the most expensive one. It’s the one that’s growing most quickly and when that disappears, pay the next-most expensive one off.
“It’s called snowballing. It will get rid of your debts quicker.”
Martin then told co-host Adrian Chiles the advice is really the same even if you’re trying to boost your credit score.
He continued: “If you ask me which one will restore your credit rating soonest, well, assuming that you don’t have certain debts with high cost credit like payday loans, then actually it’s all done on credit utilisation and debt use type equations and it doesn’t make that much difference.
“In my view, you having greater disposable income because you paid off more expensive debts in the long run will be better for your credit rating anyway.
“So I’m going to stick with my answer of pay off the highest interest rate debts first, pay the minimums on everything else and pay the maximum on your highest interest rate.
“Because if you’ve got a debt at 30% and all your others are at 10% well if you don’t pay that one off it’’s gonna grow and grow and grow and grow.
“So get rid of that one and then move onto the next ones.”
