Martin Lewis provides bank card ‘1p or £1000 rule’ and says ‘essential’

Money expert issued an urgent warning about paying off credit cards saying a key mistake means you pay a lot more interest

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Martin Lewis has issued a crucial ‘warning’ – stating that the ‘rule’ applies even if you owe just 1p on £1,000. On his podcast this week, the money-saving expert highlighted the hefty penalties people can rack up on their credit cards.

He warned that failing to completely clear your card could lead to significant repercussions. In a post on X titled ‘Credit Card Warning: When 1p Costs as Much as £1,000’, he stated: “This is an important warning about the way that credit cards work. Imagine you’ve spent £1,000 on the credit card. If you then pay off the £1,000 so you totally clear it, there is no interest in the month.”

“But if you were to pay off £999.99, so you’re just a penny short, you don’t pay interest on a penny for the month, you still pay interest on the entire £1,000.

“This is why for years my catchphrase has been: ‘PAY OFF YOUR CREDIT CARD IN FULL!’ The ‘IN FULL’ is important. I talk about it when it’s a credit card reward, say for getting cashback, or for cheap spending on a credit card abroad.

“Because if you do the ‘IN FULL’ you neuter the credit card’s ability to charge you interest. If you miss even a penny, it can still charge you a whack.”

Previously, Martin Lewis shared his ‘two rules’ for anyone burdened with credit card debt and advised This Morning viewers on how to tackle their financial woes. He also pointed out that opting for debit cards instead could be a misstep. During his appearance on the ITV show, the personal finance guru gave host Cat Deeley tips on how viewers can overhaul their finances.

Last month, he shared his expertise on a segment about debt and how to avoid hefty interest payments. He suggested that transferring the debt to another card could be a clever way around this, provided the new provider is suitable. Mr Lewis explained: “So with credit cards, the key tool is a balance transfer. That’s when you get a new card that pays off the debt on old cards for you.

So you now owe the new card, but at 0% interest, and even some poorer credit scorers can get these. “He also advised people to follow two golden rules when trying to sort out their finances, including avoiding any negative impact on your credit file: “First of all, do not just apply.

Get yourself onto an eligibility calculator on a comparison site, preferably, that will then tell you which of the cards available you’re most likely to be accepted for, because if you apply, it puts a mark on your credit file. “By using an eligibility calculator, you avoid leaving a mark that could harm your credit file, allowing you to focus on where you’re most likely to be accepted. When it comes to choosing cards, if you’re fortunate enough to have options, aim for the card with the lowest one-off fee within a long enough 0% period.”

Martin Lewis has shared some valuable advice on credit cards, stating: “I’ll let me take you the longest card on the market, there’s a couple of other things on this, the longest card on the market is TSB. It’s up to 38 months, 0%. I’ll talk about the ‘up to’ in a moment. With a 3.49% one-off fee, so if you shift £1,000, you’ll pay £35 fee. You could go much, much shorter. The longest no-fee card on the market is Barclaycard, up to 14 months 0%, no fee.”

He further advised: “So if you could clear all your debts in 14 months, you go for the no fee. But if you need longer, you go longer.”

When host Cat queried: “Host: I see, so you buy yourself more time essentially?” Martin confirmed: “So you buy – but you have to pay a fee to do that.”

The money-saving expert has previously warned about the pitfalls of using debit cards to avoid credit card interest. He cautioned: “Many people tend to think credit cards bad, debit cards good, but it just isn’t that simple. First of all, if you’re overdrawn, a debit card is a debt card too, and a typical high street overdraft is at 40% annual interest, compared to a high street credit card at 25% annual interest. Overdrafts are more expensive debt than credit cards. If you had to owe on one-you’d be best not to owe on either-if you had to owe on one, you would be better to owe on the credit card.

“Plus you have extra protection when spending on a credit card too. Section 75 rules state if you’re buying something that cost over £100, up to 30 grand, and you pay for any of it, even a penny of it on a credit card, the credit card company is liable for the entire amount and jointly liable with the retailer. So, if something goes wrong, you can go back to it. On debit cards, you only get chargeback.

“Add to that the fact that on a credit card you can also get rewards on your spending, cashback of up to 5% for a few months and up to 1% on a regular basis, then for many people, done sensibly, as long as you’re paying your credit card off in full every month and you’ve chosen the right credit card, it’s often a better way to spend than a debit card. I’ll be going through this in full detail so you know exactly what to do in the podcast, card by card.”