Should you overpay your mortgage or save – and how to make it work? And no ‘no standing charges’ tariffs

23:47OK. Sorry, you've got a mortgage rate that's higher than your savings interest rate. When is best to start over paying off your mortgage and by how much? Once you've got a cash emergency fund, and as soon as you can afford to, as long as you don't have any other uses for the money, and we'll be talking about investment in a little bit on that. Janice, we haven't started overpaying yet, second year in, but in three years we should have a lump sum of 90K. Our rate is 5.6%, quite high. This isn't our forever home, so what should we do? Well, I think when you have that money, if you have a mortgage rate of 5.6%, you cannot earn 5.6 % in savings with the exception of a...

24:24help to save if you're on universal credit or a regular saver, you can put a couple of hundred quid a month in. But anyway, especially because you're going to be getting a new mortgage, the other really important point here, if your LTV, your loan to value is higher than 60%, in other words, you are borrowing more than 60 % of your home's value, then reducing your loan to value, you with me, can improve the mortgage that you're able to get. So mortgage rates tend to improve at 95 % loan to value, so that's equivalent of a 5 % deposit if you're a first-time buyer, at 90 % equivalent to a 10 % deposit, at 80 % at 75%, 70-ish, 60-ish, and then they don't get any better.

25:09So even if, let's say you can save at 4.6 % and your mortgage is 4.4%, if you're but LTV is relatively high, then overpaying the mortgage, whether you do that as a lump sum once you're ready to get your next mortgage or whether you do it in the middle, means that when you come to remortgaging, you may well be able to get a lower interest rate on your future mortgage that would save you anyway. That's the other big benefit for those people who don't have that much equity in the house, that you're effectively building equity in your home because you're reducing the mortgage, so you're increasing the gap, and that can be really beneficial when you remortgage.

25:46So you have to factor that in. In their case, clearly your forever home is probably going to be a bigger home. That's the way most people work. You've currently got a 5.6 % interest rate. That's pretty high anyway. It looks, that's a pretty good bet for overpaying your mortgage.

26:02And we're talking about overpaying mortgages. The basic rule, the rule of thumb, if your mortgage rate is higher than your after-tax rate, you can earn on savings, then you're better off to overpay the mortgage. Otherwise, you're better to save. We're going to come to investment in a moment. The interesting thing here, and the point I do need to make, I had someone who got in touch with me, we haven't got a question on the show about this, who was asking me, it was actually on Question Time. It was on the Question Time podcast last week. And he was saying, you know, my savings pay 2.5%, my mortgage is at 4%.

26:31Clearly, I can earn more. I presume I should be overpaying my mortgage. And my answer was, no, you should be earning more in your savings. Right. So it's important that when you're doing this sum of which works well and when you're going to your mortgage overpayment calculator. Savings are really easy to get a better rate if you're on a low rate. You open up a new easy access savings account or a fixed rate account and you put that rate in. We are comparing the best mortgage you can get against the best savings you can get. If you don't have the best mortgage, get a better mortgage. If you don't have the best savings, get a better savings.

27:02Don't forget that. And then do the calculation. So I just wanted to make that little bit of a point that I'm not saying, look at your current savings. If your current savings are paying 1 % and your mortgage is paying 1.5%, that's not a reason for overpaying your mortgage. That's a reason for getting better savings, because you could be earning 4.5 % in your savings. So that's the sort of caveat to the comparison I was making earlier. Maria, you've got a mortgage fixed until March 2027 at 1.26%, which is low. Very low. I mean, super cheap. Well done. You obviously locked in four three or four years ago on a five-year rate that was super cheap.

27:38You've done very well out of it. But let's remember that rate is going to jump up. I mean, unless something radical happens to interest rates, you're going to be paying substantially more once we get to 2027. So you've got to be prepared for that bill shot. And obviously reducing the mortgage at that point would be useful. OK, but I think she's talking about reducing now. Yeah. But her husband is saying we're better off putting the extra money that you would spend on repaying the mortgage into the S &P 500, so into blue-chip shares, basically. Yeah. So let's just talk through this. Clearly, with a 1.26 % mortgage rate until when in 2027?

28:16March next year. Okay, so 14 months. You would absolutely be better putting that money in high-interest savings. The money you would use to pay off, you mean? Putting that money in high interest savings for now, because you can earn 4.5 % and it's only costing you 1.26%. So then the first easy option is put it in high interest savings. You could even get a one-year fix because it's just over a year. But make sure at the point you're remortgaging and you're going to have a new, more expensive mortgage, you have that cash is liquid, that cash is available to you, so you could use it to overpay the mortgage if you wanted.

29:01Investing is a more difficult question. The general rule on investing, and I need to state I'm not a regulated investment advisor, but the general rule on investing is investing is good if you're putting money you don't need away for the longer term. Now, that means you are having to make this decision based on an uncertainty. The uncertainty is we don't know what your mortgage rate will be in 2027. Right. We know it's going to be worse. We assume it's going to be worse. We don't know if it's going to be really, really a lot worse. We don't know what's going to change between now and then. Now, if you put your money in investing, the problem with investing over the short term is markets go up and down and up and down and up and down and up and down.

29:45And if you would need to crystallise it at the point, at a certain point, regardless, you could be crystallising on a down, not crystallising on a nut. And that's why generally the rule is you're investing for over five years. So you have a real uncertainty issue here. The first question, in your case, it's not should I invest or pay off the mortgage? The question is, should I be saving for the next year, then overpaying the mortgage? Or should I be investing over five or six years? And there's an uncertainty element. Now, the rate of the mortgage makes a difference here too, because this is all about opportunity cost.

30:19There was a person earlier who had a 5.6 % mortgage. Well, actually, because there is no risk premium on a 5.6 % mortgage, overpaying a 5.6 % mortgage gives you 5 % guaranteed returns. How much would you want to hope to be making? I'm going to ask you this, not as an investor. How much would you want to hope to be making before it was worth not clearing with no risk 5.6 %? You wouldn't want 5.6 % in investments because that's a risk. So it's got to be more, hasn't it? Yeah, yeah. Yeah, well, you'd be thinking of seven or eight. Exactly. So that's where it gets more difficult. And that's where I can't give you an answer.

30:54This becomes a question on your attitude to risk. If this question was, I have a 1.25 % mortgage fixed for the next five or 10 years, and you're saying, I'm thinking of investing it in a broad spread of investments that shares my assets, I understand the risks that I'm taking and all the other caveats that we need to do when we talk about this. I think that has a level of being quite sensible and could well be what pays you best in the long run, right? Because investing over the long period works. But because of the uncertainty element in this question of we don't know what your mortgage rate will be, we don't know if mortgage rates will jump to 7%, I mean, I think it's unlikely.

31:34But in April next year, there's a much bigger risk factor in investing here. Because if you're talking, actually, I'm going to need that money in 14 months, then that's where investing becomes a lot more difficult. So I think in the nature of this question, me, I'm not telling you what to do. This is a regulated area. Me as a risk-averse person, I would be saving and overpaying my mortgage at that point because I don't know what's coming. Someone who's less risk-averse would be investing. But if you were talking over the long period overpaying your mortgage versus savings, well, it depends on what's going to happen to mortgage rates.

32:05And if you've got a very cheap mortgage, well, investing rather than overpaying could well be a winner. Okay, Pricey is paying an extra£200 a month and a lump sum when he can, but he got a letter saying that they're reducing his minimum payment per month. Can they do that? Yeah, and it's really frustrating when lenders do this. Just keep overpaying. Keep your repayments, including your overpayment, what they are. This is what we talked about earlier. Your repayments are£500. They're reducing it to £400. You're paying£700 anyway. Let them reduce it to£400. It doesn't mean you have to. Keep paying£700.

32:36Yeah. Right? That's how you... And say that you want this to go on to the capital reductions. We've actually written in the past to the regulator saying that mortgage lenders should be forced to allow you the option of reducing the capital and keeping your repayments up. I mean, it's a behavioural thing from them because the longer you're borrowing for, the more interest they make. Somebody says if I can afford£600 a month over 20 years, should I take a mortgage that's£500 over 25 years and pay£500 and£100 over payment a year to pay direct to the brick rather than interest? If I'm understanding this right, and I may not be, then they're saying, I can afford 600 quid, but should I get a mortgage spread over a slightly long period at 500 pounds and overpay?

33:24Yeah. Well, the advantage of that, as long as you will definitely overpay, the advantage of that is you give yourself some flexibility in case of change of circumstance. But you just have to check that you're going to be able to qualify for the same rate and that they've done the same risk assessments. And there's a lot of, you know, catarisk paribus in this question, all other things remaining equal that needs to make it work. Speak to your mortgage broker. By the way, with mortgages, it's a very easy route. Go and speak to a good mortgage broker to see that you're getting the cheapest mortgage when you're doing this and talk to them about this if you're confused.

33:52That's what they're there for. Sonia, overpaying by£1 ,200 a month, taking seven years off the term, it's a psychological thing for me to be debt-free. I just, you know, I get that. Yeah, totally. Debt-free, risk-free in your sense. And yes, you might have done better investing. You probably wouldn't have done better saving, but you might have, almost certainly not, but you might have done better investing. But that lack of guarantee, we are a risk-averse nation, I think is something that's very powerful to people's psychology. Dom, seven years left on an interest only at 2.5%. Okay. Is the only answer to pay the minimum and invest the overpayment, i.e.

34:31the money you've used for the overpayment, to help to pay off the principal in seven years' time? That is – it depends whether – people use the term invest and they sometimes mean saving and they sometimes mean invest. Grow, I think, yeah. Yeah, grow. Certainly savings, you can guarantee you can earn more in savings right now than you can overpaying. Investment will generally in the long run – I've said this before, but I just need to be really clear – will out-overperform savings over the long run, but there is no guarantee. So that is on your attitude to risk in those cases. But yes, overpaying a 2.5 % interest-only mortgage, as long as you're not going to touch the money elsewhere, in general, you'd be better putting the money elsewhere.

35:12I mean, if you're on universal credit and therefore having bigger savings could reduce your universal credit, there are always ifs and buts, but big picture here. I think Beverly is asked about offset mortgage savings account, which, as I had always understood, it was basically like your mortgage was effectively a giant overdraft on your bank account. Yeah, so the idea of an offset mortgage is all your money goes in and is temporarily overpaying while you have it. And then when you take it out, it reduces your overpayments. So it reduces the amount that you owe on your mortgage debt. Conceptually brilliant, works incredibly well, and they are available.

35:49But.

35:53I love doing this. The way you go with your index finger. And I know it's coming. I mean, but, and as the word you're licks are forming, I see the finger coming up. But. But I'm trying to do clear communication of something complex. So the but is what is the interest rate, right? So let's, we're going to do, I'm going to do an absurd example to make it really clear. If you have a 3 % mortgage that you can't do offsetting on compared to a 6 % mortgage that you can offset, you're going to need to have to offset, i.e. have a lot of your savings to reduce the amount of your mortgage to make it worthwhile.

36:36So because offset mortgages tend, speak to your mortgage broker, to come at a premium that you pay more for an offset mortgage, you need to be keeping a lot of your money. You need to have a very substantial chunk of your mortgage offsetting it. You know, tens, hundreds of thousands of pounds in there to make it worth the extra premium you're paying in the interest rate for the offset mortgage. So conceptually, everything else being equal, offset mortgages are great, but everything isn't equal. The interest rates aren't equal, and therefore it takes a calculation. And if you're just going to be putting, you know, if all you're doing is you haven't got any spare money, you earn £3 ,000 a month, right?

37:14You've got a£300 ,000 mortgage, and all you're doing is effectively using the offset mortgage to put that£3 ,000 in over a month, but then you'll spend it. so it's an average£1 ,500 you're putting in over a month and you're paying an extra one percentage point interest rate to do that, it's going to cost you a fortune, right? If you've got£200 ,000 of savings that you don't want to properly overpay your mortgage and knock it away because you might want it in future, but you think you probably won't want it for the next 12 years and you're putting that in your offset mortgage, then paying the higher rate might work for you.

37:43That was my but. And I think it was a nice but. It was a nice but. You know, and I like big buts.

37:52The tellers, what money rule do you follow now that you once thought was pointless or over the top? What have you got? Ricky, pay myself first. I used to think saving small amounts was a waste of time. What's the point of£10? Then a tyre went, a bill landed early, and I didn't have that horrible stomach drop panic. Boring habit, less stress actually works. I like the phrase paying myself first. I think that's a really good psychological way to think about it, Ricky. Good for you. Michelle, this one got a lot of likes. A lot of likes on social. Pay into a private pension as soon as you start to work.

38:23It seems like a lifetime away and when you're in your late teens, early 20s, but it's gone in a flash by the time you hit 50s and realise. Quite right, remember, auto-enrolment starts at the age of 22. But if you're 18 or older and you earn over roughly six and a half grand, while you're not automatically enrolled into your workplace pension, you can choose to opt in. And if you opt in, the company still has to give you the matching, semi-matching contributions, i.e. you put 5 % of your salary in, they put 3%. And if you're living at home with your parents and you're 18 to 21 and you've got no other expenditure, you're probably going to find you have more disposable income than other points in your life if you're working.

38:59So you might want to do that. Andy, now I'm approaching 60. I don't spend it until I've got it. In the past, I've always been why wait if there's a way to get it now. Well, I suppose as you get older, it should be the other way around in a way. You should be thinking, well, I can't take it with me. I think it's just about it. So I think 60, it's about getting sensible, isn't it? I mean, ultimately, if you – debt and savings – I mentioned this with mortgages earlier, but let's go really clear. Debt and savings, two sides of the same coin. Debt is where you pay for something each month. Debt is where you buy something, then you pay for something each month after you've bought it, plus you have to pay interest on top.

39:34Saving is where you pay for something each month before you've bought it, they give you interest, and then you buy it. They're the same thing in reverse, but in one you're getting the interest, in the other you're paying the interest. A spreadsheet with a clear budget for income, outgoing and savings, keeping track of what financial situation I'm in, has helped me turn my finances around. Staggers me to think I thought it was funny people did it and I just spent as I pleased. You know, I always talk about my job is not to make people be tight. My job is to help them utilise their money in a way that gives them maximum happiness.

40:04And while it sounds weird that a spreadsheet and taking that time, people, once you have surety of understanding where your finances are, It is a much more relaxing way to live if you can get yourself here. I'll let you read the next one because it's sort of about me, so it feels weird for you to read it. Okay. After about five years of reading, you say every January sales. If you weren't going to buy it and you don't need it, then it's not a saving. Saved a fortune not buying things I don't need. Absolutely. You've got to count to ten with everything you buy, particularly Amazon and all the rest of it.

40:34Or go back the next day or actually think about it. I'll tell you a story in a moment because it's funny. but um but my mantra i do on my black friday mantra is quite simple if something is 50 off and you were planning to buy it anyway well done you saved 50 if something is 50 off and you're only buying it because it's discounted you've just wasted 100 and that's sort of the way to think but i'll just tell you this story my friend one of my oldest and bestest friends i won't mention her name because she says this didn't happen she denies it but it did happen right years and years ago before I was married she was one of my mates I used to go and hang out with and we were in a shop and there were two pairs of black boots Adrian and to my eyes these two pair of black boots were absolutely identical but to her eyes they weren't one cost 60 quid one cost 110 quid and she was sitting thinking about it and I'm sitting there going and I said alright look this is the actual decision you made and I got money out of my pocket and I held up the 110 pound pair of boots and I held up the 60 pound pair of boots and I had 50 quid in my hand as well And I said, this is the actual decision you're making,£110 or the£60 pair of boots and£50.

41:43And she said to me, wow, I've never thought of it that way before. That's really fascinating. And she stood there with her mouth open, went, thank you so much, and bought the£110 pair of boots. I mean, I had one where somebody pointed out to me that I was going... And it is true, and you know who you are, and it is true. I was going a long way to save£10 on a£20 bottle of wine. So instead of getting it for£20, I was getting it for£10. I was putting myself out. The person I was with said to me, would you make the same effort for you buying a car for£5 ,000 and you got£10 off it? And you go, well, no, of course I wouldn't because it's like...

42:26But it's the same£10. It is, except I suspect you buy a bottle of wine more frequently than you buy a car. Yes, but it's worth, you know,£10 is£10, or£100 is£100. But listen, there are a whole many psychological things about money when we go into there. I mean, this is why one of the great ways that people make profit over the years on lots of PPI was this, travel insurance on package holidays was this for many years. It's called the annual need. So, and I remember, I used to, I mean, the reason I wrote about it in my book, which I'm not trying to sell because it was years ago. My very first job, one of my very first jobs was selling caravan awnings, right?

43:02So they were the attachment for the caravan. And I worked in this caravan park, and I was taught this sales technique, this annual need sales technique, which is basically someone would be buying this 1 ,500 quid caravan awning, right? And you'd sell them the caravan awning, and it'd be a big decision. What's the frame size? And you'd go through everything that involved, and it'd be an hour that you were there selling it. And then after you finished that, what I was taught to do that worked so effectively, I'd go, oh, and you'll need a floor mat. And they'd go, yeah, yeah, yeah. and the floor mat was£100 for the awning but the profit was in the floor mat less in the awning but there was no thought to the floor mat because all the emotion was in buying the awning because that was the big purchase travel insurance on package holidays oh you'll need it they sell you you've spent half an hour an hour deciding on the holiday you've decided on the holiday and they go oh you need insurance so you go yeah but you're getting a loan you know you're fully insured loan oh you'll need insurance yeah yeah yeah all the profits on the ancillary not on the main and we're very not logical about that it's exactly what you're talking about it's the idea I've focused on the big thing so much I don't have the brain capacity think about the secondary thing speaking of brain capacity play the theme tune I like that every week I try and sort of filibuster this and just same part of keeping talking so it's against Adrian welcome to Money Mastermind the score stands at 15 right and 32 wrong in this three-option multiple-choice quiz, which means you're...

44:34N-B-R-C. No better than random chance. In fact, far worse than random chance. We need a new F-W-T-R-C sting. You have got all four wrong this year. And because of that, I wanted to go easy on you. But I don't know how to do it. I don't have that in me. So I took 10 of the Money Mastermind formats from the past, Put them into a large language AI on the back of our AI chat in last week's show with the following prompt. Roll. Martin Lewis producing a single money mastermind segment for Adrian Charles on the radio. Inputs. I have shared example mastermind questions that use a short, relatable, humorous scenario as set up.

45:16A multiple choice question designed to teach a consumer money point. A punchy factual takeaway. Task. Create one new mastermind question that mirrors the structure and tone of the examples. Source requirements. Base facts and advice primarily on, money-saving expert, guidance. There you go. So, that was the AI prompt I gave it. I'd bother to have you written all that, couldn't you? You've just written the question. But anyway, great idea. Actually, to be honest, I write it in a short sentence and I ask it to write the prompt for me and then give it the prompt. My big AI tip if you're designing an image or something, don't write your image description and then ask it to do it.

45:48Write your image description and then ask it to write a prompt for how you would ask the image generator to do it. and that works much better. But that's... Anyway, at Mastermind, written by AI. Now, Adrian, picture the scene. You're abroad, somewhere European, somewhere with cobblestones, strong opinions about lunch and a quiet disdain for British tourists. You've done your prep, you've packed the socks and tutted at the exchange rate. And crucially, you've got your G-hit card in your wallet. Disaster strikes. You slip, twist something important and end up needing medical treatment. At this point, Adrian, you lean back, wince theatrically and say the fateful words, it's fine, I've got a G-HIC.

46:34I didn't add the accent, I did that all by myself. So here's the question. With a valid G-HIC or E-HIC, what are you actually entitled to if you need healthcare while temporarily away in an EU country? Is the correct answer... I think this is too easy. I would have made it harder. Oh, don't say. A, all medically necessary treatment on the same basis as a local resident, so if you pay, they pay. B, completely free healthcare for anything that goes wrong during your trip. C, emergency treatment only and nothing else. Now, I need to note, you can't do your usual of trying to second guess what I would have done and what I'm trying to set you up, because I did not write the question.

47:12So A, all medically necessary treatment at the same price as a local to pay. B, completely free healthcare for anything that goes wrong during your trip. C, emergency treatment only. I should know this. It's something else I don't know. I just don't know. Come on, think it through. Well, I would... Well, the first one... The first one is all medically necessary treatment on the same basis as a local. So if a local pays, you pay. If a local gets it free, you get it free. The second one is completely free healthcare for anything that goes wrong during the trip. And the third one is emergency treatment only and nothing else.

47:45I'd say it's either the first one or the third one. I think that's a pretty... I mean, the middle one... The middle one is a very clue I would never have written. Completely free healthcare for anything that goes wrong during the trip. It's not specific. What goes wrong? What counts is going wrong? So I'm going to give it you as your friend. It's not B. And that is a clue that you would never have had. That AI failed on that clue. So A and C. Emergency treatment only. What would I expect? I'm just trying to think. What I would expect if I was doing it. I would expect to... let's go for having the same as a local.

48:22All medically necessary treatment on the same basis as a local resident. So if you pay, they pay. So you're saying, A, final answer? Yeah. Play the hallelujah. Hallelujah. Hallelujah. Hallelujah. Hallelujah. Yeah, and that is what a G-HIC or an E-HIC does. The global health insurance card, which doesn't have that many more countries than a European health insurance card, but anyway, that was a bit of Brexit spin that came out on the back of it, is simply a card that says you get treatment like a local. That can mean going to a GP. It can mean going anywhere. Sometimes they will struggle to accept it, but effectively it's a reciprocal arrangement that means we can use their health service and they can use ours when they come here the same way as if you were a local person there.

49:01Make sure you've got a valid up-to-date one. Lots are out of dates. And never pay for it. It's always free. There are scammers out there trying to charge you. Shises out there. Don't pay for your G-Hick or E-Hick. But if you're going to Europe, get yourself one. So I've finished the bit in the studio with Adrian and I've moved into a separate studio, Studio 6C for those of you who are interested. I know, isn't that excited? And joining me virtually down the line is podcast producer Simon, who's back from paternity leave. PPS, how are you doing, fella? I'm absolutely brilliant. Delighted to be back.

49:31It's been a long time. The last time I was on air with you, I still believed England were going to win the Ashes. That's how long ago it was. And how foolish you were. Oh, dear. It's that kind of naivety that means that you're the expert and I'm not. We've won in Sri Lanka since. Yes. Yeah, yeah, yeah. Anyway. And because I've now got two children under the age of three, so the only reading I do these days are Julia Donaldson books. So we'll see how that impacts the kind of tempo with which I read out things like Tell Us going forward. Although just thinking with children that age, that was probably not bad for the Ashes.

50:03When you were up in the middle of the night, you could at least put something on to watch. Well, so I bought a subscription to the broadcaster for the exact reason. And I gallantly said to my wife, no, no, I will do the nighttime feeds. And there weren't quite as many days play as I was hoping, if I'm honest. Yeah, I'd factored in things would go beyond the second day a bit more often than they did. Well, it's very nice to have you back, fella. Simon, I think we've got one question left on overpaying your mortgage that we didn't cover. Shall we do that one quickly? Yeah, so Harriet got in touch.

50:31She wants to know if someone had an interest-free credit card, a mortgage and a student loan, which would you advise overpaying first? That is an impossible question to answer without more detail. So I'll try and talk you through each one in turn. Of course, we don't know the mortgage rate. And as I've been saying all along, if you can earn more in savings than your mortgage rate is costing you, you're better to save. So whether you'd overpay the mortgage or not is really dependent on whether you've still got one of those super cheap 1%, 2 % mortgages from four or five years ago, or you're at a current standard variable rate at 7%.

51:05The higher the interest rate, the more likely you should be overpaying the mortgage. The student loan question, I'm afraid, is even trickier because there are five plans of student loans and I don't know which one. Both the postgraduate loan and the plan two loans have for some people above inflation interest rates added. But the interest rate that is added is not the same as the interest that you pay. That depends whether you'll clear the debt before it wipes. Otherwise, it works more like a graduate tax. Go and have a listen on that one to the podcast I put out last week. That was specifically about plan to overpayments, but it gives you a concept of whether you should overpay those.

51:46That isn't, you know, that's a whole 20 minutes in its own right. Now let's do the 0 % credit card. Well, look, if you have a credit card at 0%, it's not costing you any interest. So you would be better on a purely technical, tactical basis to keep that money in a savings account. And that's what we call stoozing. Stoozing is where you deliberately artificially make a 0 % credit card debt so you can earn interest on the money that's on it by saving it. There's lots of ways to do that. I'm not going to go into detail now, but it's only for people who are savvy and really careful. The issue with the 0 % card is what happens when it ends?

52:21The rate will jump to about 25%. So will you be able to get another 0 % card? Will there be a fee for doing so? Now, in a perfect world, so let's imagine that you have quite a high interest mortgage, say 5%. We're going to ignore student loan debt. It's just a whole other subject. got a high interest mortgage at 5 % and you can borrow money on credit cards at 0%. Well, back in the noughties when stoozing used to be slightly easier and we used to talk about it more because there were less fees involved in balance transferring and stuff like that. There were people who stooze pots, that's the total amount of money that you're stoozing, were getting into, there was one person I remember who got up to about£80 ,000.

52:58So they had£80 ,000 of artificial 0 % debt on a credit card. Artificial because they didn't actually have the borrowing, they just took it out and then had that lump sum available. But they then put in their offset mortgage, and you've just heard us talking about offset mortgages with Adrian. So they had 80 grand of 0 % credit card debt sitting in their offset mortgage, saving them 6 % interest on their mortgage. So, you know, about 5 grand a year interest saved by this artificial nature of stoozing. So those who are incredibly savvy, understand what they're doing and know the risks, can utilise 0 % debt to reduce their mortgage.

53:34But that is not something the vast majority of you should be doing. If you're sitting there going, I don't understand, or you're going, oh, it sounds, I'm not sure that's for me, or it's a bit risky, you're quite right. Don't do it. Far better, just clear the mortgage and clear the credit card. But for those who really know how to play the system, then it can work that way. But as I say, the risk is you won't be able to get future 0 % borrowing, so you always need access to cash to be able to pay off the credit card at the point the 0 % ends, just in case, which an offset mortgage did give that person just in case you can't get another 0 % deal.

54:06So overall, my guess is it's probably pay off the mortgage first but have money available to make sure that you can clear the credit card within the 0 % period. I think that answered it. Perfect. Did you understand? Yes. Good. Phew. Right. Shall we do a few more tellers before we finish? Yes. Shall I go first? Karen, in full, spent too much of my youth overspending on my credit cards and only paying the minimum payment. Then I listened to you. Ah, well, that's good. I'm very pleased to hear about it. Well done, Karen. Do you know what? Simon just walked in. I'm very lucky. I have a special guest in the studio with me, right?

54:44Yeah. Which is actually Lara, Mrs Money Saving Expert, who happened to be in the building and has popped in to say hello. Finally, a broadcaster who knows what they're doing. I have literally popped in to say hello. I thought I was going to remain a mystery guest, which would have sounded more exciting. But I think, shall we get her to readers tell us? Yes. It's a special pod only thing. Yeah, yeah, 100%. OK, so the rule, if you can't afford to buy it, you shouldn't contemplate borrowing for it. The only exception is buying a house. Ha, I thought, what rubbish. What changed my mind was looking at the total expenditure for a car I decided to borrow for.

55:16Whoops. There you go. So yeah, another classic example, people just don't understand the real cost of borrowing. And when you're borrowing anything, if you possibly can, you can't do it on a credit card, but you can do it on a loan. You need to look at what are you borrowing and what is the total repayment over the period. And when you realise the excess of cost for expensive borrowing, it really makes a difference. Simon, do you want to do the next one? Yeah, well, this one doesn't really apply to me. I obviously look good in everything, but Kim. Oh, sorry, the Kim one. I definitely need Laura to hear this.

55:42All right, can we? This is actually quite an interesting one. Kim says, I have my colour and style analysis done when I was around 40 and I've never wasted money on clothes that I won't wear. Everything I buy suits me perfectly. Nothing sits in my wardrobe unworn. Shopping is super easy and efficient. I also buy nearly all my clothes from charity shops and online pre-love sites. I think that's fascinating. I mean, I would never have thought of having a colour and style analysis done so you don't waste money on clothes. You can't tell. I suppose it's... Thank you very much. But clearly, Simon, I've seen how you dress, so you can't talk either.

56:16But we have... Lara, you probably have a better take on this than I do. Well, I have a lovely new colleague this week called Charlotte, and Charlotte used ChatGPT, obviously you could use Gemini or another, to input a photo of herself and ask what colour she should be wearing. I thought this was a really interesting use of AI because I wouldn't have thought of even asking it as a question of anybody or any AI. Funnily enough, if you don't know, Lara, my wife, is a tech journalist. No wonder she mentions AI at the first thought. I suppose ultimately it's simply a question of buying the right thing.

56:49If you buy the right thing that lasts longer and you're going to get more use out of, you have a greater utility and therefore you save money on the back of it. Kim, you've opened up our eyes. Maybe, Simon, we should consider doing something more on that in future. I think it's really interesting. Let's do our last couple now. Peter got in touch. Credit cards are evil schemes for banks and for the few people who can use them without paying interest or profit off or debt slaves. I learned this by seeing the impact of credit cards on my family and friends and by looking at FCA data, I would make the promotion of credit cards illegal.

57:19Yeah, except the problem, we've just talked about one advantage of 0 % cards, and also cards used right. You know, if you spend on a credit card, you pay it off in full every month and you get rewards or you get, you know, it can be the cheapest way to spend overseas and you also get Section 75 protection that you don't get anywhere else. Credit cards are the best way to spend. They're just a bad way to borrow in general. And I think it's about neutering the ability of the card to borrow, which is where I would go. So I'm not quite sure. I 100 % agree with Peter. So let's do a final one now. Chris, don't feel guilty about enjoying spending the money on yourself that you've worked hard your whole life for.

57:56At 62 and now in early retirement, my policy is to enjoy now the money I've saved, as in another 15 or 20 years, I might not be able to or wish to enjoy the things or visit the places I want to now. And I absolutely agree, funnily enough. I think money is about utility and happiness. You need to plan and be prepared for the worst to happen and have the contingencies available. But actually spending wisely, checking that you're doing things efficiently, not wasting money on things that don't give you happiness or value, or at least getting the things that you need and the necessities, not joyful things as cheaply as possible in a way that works, is what enables you to spend the money on the things that you want to to give you a better life.

58:36And that seems a lovely way to finish.

58:41That's it for this week. We tend to put out a new episode every Thursday and Monday, which is our Question Time podcast, where you can ask me absolutely anything and everything. Open brackets within reason, close brackets. So if you've got a question, send it to martinlewispodcast at bbc.co.uk. And if you've enjoyed today's pod, 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. And if you haven't enjoyed the podcast, but you're still listening right now at the very end, well, I think that's more of a question for you than for me.

59:15I mean, seriously, you've got an off switch. You could have pressed it.

59:36Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.