Martin's debt cost-cutting masterclass
The UK base rate's now 10 TIMES higher than 6mths ago
Cut card, mortgage, overdraft, loan costs & more by £1,000s before it rises further

The Bank of England increased UK interest rates by 0.25% points last Thursday, taking the rate to 1% - the fourth rise since last November, when the rate was just 0.1%. And the momentum is likely to continue as the committee was split - with some wanting even bigger rises.

While 20 years ago, folks would've been shocked at how low rates are even today, the direction of travel means anyone with debt, or considering getting it, needs to get on top of it sooner, to make it safer, before things get more expensive. 

If that's you, I want to check product-by-product if you can save £100s or £1,000s by cutting the interest (though if you're in panic about debts, jump straight to one-on-one help). This is especially important as sadly borrowing levels are ramping up due to the cost of living crisis.

The 0.25% point base rate increase will likely take a month to feed through to most standard variable rates (SVRs), though some tracker rates have already gone up. It will add roughly £12/mth per £100,000 of mortgage (use our mortgage calc to see your exact rise).

Those on fixed mortgages won't see a change until their deal ends, but then many will be in for a shock. Back in October, when we warned you to sort your mortgage, there were over 50 fixed-rate mortgage deals below 1%. By January, rates were up, but there were still 600 fixed deals between 1% and 2%. Now the lowest fix is 2.1%.

That means for someone with a £200,000, 30-yr mortgage, the cheapest rate today would cost c. £120/mth more than Oct's cheapest.

However, with further rate rises predicted, and many lenders' default standard variable rates heading to 5%, checking if you can save by changing deal is a must-do. You may not save as much compared to a few months back, but compared to doing nowt, switching could still help you save £1,000s.

Full need-to-knows in our free, detailed 62-page PDF remortgage guide, but here's a speedy summary 4-step check & switch plan... 

• Check your existing lender's current deals. Switching with your existing lender is called a 'product transfer'. It used to be a crap option, but these days as existing lenders can forgo affordability checks, if you're not borrowing more, and there's likely to be less paperwork and fewer fees, it's a good benchmark to start.
  
  
• Speedily check if other deals out there can beat that. Our Mortgage Best Buys comparison tool can do this for you in minutes. If you're currently on a fix that ends within six months, it may also be possible to lock in a rate now, to use then.
  
  
• Calculate how much you'll save. The Ultimate Mortgage Calculators do this for you in a host of scenarios.
  
  
• If it looks like switching's a winner, focus on acceptance. Lenders do both credit and affordability checks which can kibosh applications. It's tough to know who'll accept you but find a good mortgage broker and they have information on this that's very difficult for consumers to get themselves.

A 0% balance transfer is where you get a new card to repay debt on old cards for you, so you owe it instead but at 0%. As more of your repayments then clear the debt itself rather than cover the interest, you get debt-free much quicker (as long as you don't borrow more).

Credit card interest rates are so high above the base rate, its increase has little impact, yet the flow and availability of this type of debt can shift rapidly - and as balance transfer rates have improved strongly since the pandemic, if you've got credit card debt, sorting it now is sensible.

The best route is via our 0% Eligibility Calculator to see your acceptance odds for top cards, without affecting your future ability to get credit. Then aim for the lowest fee (including any cashback) within a 0% time you're sure you can repay in. Unsure? Play safe and go long.

The savings can be very powerful, as John emailed: "Used your site three times to gradually get all my credit card debt to 0% cards. It's now saving me £190/mth in interest, which I'm using to pay off the debt as quickly as possible. Many thanks."

If you do it, follow the Balance Transfer Golden Rules:
a) Never miss your min monthly repayment, or you can lose the 0%.
b) Clear the card before the 0% ends, or you pay the higher APR.
c) Don't spend/withdraw cash. It usually isn't at the cheap rate.
d) Usually you must transfer within 1-3mths to get the 0% deal - check.
e) You can't transfer between two cards from the same banking group.

Full help and info in Best balance transfers (and see APR examples).

Store cards are just credit cards you only use in one store chain, but usually with far costlier interest, eg, New Look is 28.9% rep APR, Argos 34.9%. If you've got them, you can usually balance-transfer store card debt too, so just follow the info in point 2.

Overdrafts are an even bigger danger than card and loan debt. Almost all major banks charge about 40% EAR for overdrafts, double the interest of many high street credit cards.

That means the right thing to do for most is to pay the minimum on the credit card and focus on reducing the overdraft, not vice versa. 

a) Can you switch to a 0% overdraft? Two banks currently offer newbies 0% overdrafts - and they'll even pay you to switch to them...

• First Direct: Free £150 & often an ongoing £250 0% overdraft.Switchers to First Direct* usually get the free cash and the 0% overdraft (40% EAR above that). So if your borrowing's under £400ish, the £150 will clear some debt and the rest is interest-free - a huge saving. Check First Direct's own eligibility criteria to see who can get it.
  
  
• Nationwide FlexDirect: Free £100 & a year's 0% overdraft. Switchers to Nationwide FlexDirect get £100 and a credit-assessed overdraft, which for some can be larger than First Direct's - so use its pre-application eligibility tool to get an indication. Yet the cheap rate only lasts a year, so plan to clear it within that time or it rockets to the 40% EAR. Check Nationwide's eligibility criteria to see who can get it.

b) Use a 0% money transfer credit card. For larger overdrafts, a few specialist cards allow 0% money transfers for up to 18mths - where for a small fee the card pays cash directly into your bank account, clearing your overdraft, so you owe it at 0% instead.

c) Treat overdraft borrowing like any other debt - repay it. Try to repay a set amount each month, eg, £50 (so you should start the next month with a £50 smaller overdraft than the month before). For more help, see our 9 overdraft cost-cutting tips.

Loans are still dirt-cheap right now - but I suspect we'll soon see that change. So a simple question you should ask is... can you get a new loan to clear your existing one and pay less? It's not just about finding a cheaper APR, as there can be early repayment fees. Full help in Cut existing loan costs, but here's a brief A B C (and D)...

a) Ask your current lender for a 'settlement figure'. That's how much it'll cost to clear your current loan, including any early repayment costs (so you know how big of a new loan you need to clear it).

b) Compare it to the cheapest loan you can get for that amount. Full info in Cheapest loans (APR examples), but to show the range... 

- £1,000 - £3,000: Novuna* 9.8% rep APR (card loans can be cheaper)
- £3,000 - £5,000: AA* 8% (for members) or 8.1% rep APR
- £5,000 - £7,500: MBNA* and Novuna* are 3.4% rep APR
- £7,500 - £15,000: M&S*, Tesco*, Cahoot* and Santander* are 2.8% rep APR

c) If the rate looks right, ALWAYS check if you'll be accepted. Apply for a loan, and it marks your credit file (even if you're rejected). So use our Loans Eligibility Calculator instead, which shows your odds of acceptance for many loans, so you can home in on the ones you're most likely to be accepted for.

Yet all these loan rates are 'representative APR', meaning sadly only 51% of accepted customers need get that rate. Though we do now have a few 'real rates' now available via our calculator.

d) Find out if a new loan's cheaper than your current one. Multiply your monthly repayments by how many months you have left (ask the lender if you don't know) to find how much you'll pay if you stick. Or just plug the figures into our Loan Switch Calculator.

Buy now, pay later (BNPL) is interest-free, so there are no costs to be cut. Used right, it's an easy way to spread payments in the short-run if needed.

Yet Klarna, Clearpay, Laybuy and other BNPL firms are DEBT firms, and they're now near-ubiquitous at many online retailers, offering to spread the cost over a few months.

And like all debts, you should only do it if you absolutely need it, and can afford to repay. These firms make money because they're so good at tweaking our spending nipples to make us want to buy even more. And the ease is dangerous too, allowing people to build up wave after wave of potentially unaffordable spending.

MSE and I campaigned for BNPL to be regulated, and it's happening, though far too slowly. You will have rights then to take them to the ombudsman if things go wrong; but you don't yet. Please be careful. More info in Buy now, pay later.

I may have used this line before, but you can never have too much of Bananarama & Fun Boy Three - these sages knew what they were talking about.

Getting cheaper interest rates is very important, but regardless always aim to repay as much as you can, as quickly as you can, without damaging your financial stability. A few tips...

a) Focus on repaying the highest-interest debt first. It's the interest rate (APR) that counts, as the higher it is, the faster the debt grows. So list all debts in APR order, and use all spare cash to clear the highest, and just pay minimums on everything else. Once it's clear, focus on the next highest. Overdrafts are a debt and should therefore be included (but don't include student loans).

b) Got savings? Use 'em to clear costly debts. In practice, saving is just you giving your bank a loan - usually at a far lower rate than it charges when you borrow from it. So if the debt interest rate is higher than you earn saving (it usually is), repay the debt with the savings as long as there are no early repayment penalties.

While it's worth holding back 3-6mths' worth of bills in an emergency savings fund, with credit cards, if they're costly, as they have an open facility, you could use your emergency fund to clear them. Then if an emergency happens, borrow back so you're no worse off. Full help in Pay off debt with savings? 

c) Do a budget and manage your money. Get control of your spending - do a budget to see where the cash is going. What really counts is how you stick to it - many who have tried swear by (or at) my piggybanking system.

d) Boost your credit score. That way you'll be eligible for better debt cost-cutting deals in future. See my 27 ways to boost your credit score. 

My masterclass tips above are for those who are still in a functional relationship with their debt - being able to afford it and just wanting to cut the cost. If not, then you need a different tack. Do read our Debt crisis help guide, but briefly I've three questions for you...

- Do you have sleepless nights or depression/anxiety over debt?
- Do you struggle to meet minimum monthly payments?
- Is your total debt (excl mortgage/student loan) over a year's salary?

If you answer "yes" to any of these, forget the solutions above. Instead act as quickly as possible to get free, one-to-one debt-counselling help from Citizens Advice, StepChange or National Debtline, and if you need emotional support, try CAP and read our Mental Health & Debt guide too.

All these agencies are there to help, not judge. The most common feedback I get after people go is: "I finally got a good night's sleep." Give it a try - you can do it.

To inspire you, read the stories in our Debt-Free Wannabe forum.