With money so tight for most people, it is sometimes inevitable to resort to personal loans to meet a wide variety of financial needs. Personal loans especially the unsecured loan offers are quick and easy to avail. But at the same time, they’re also quite expensive. In fact, if you have bad credit and you want an unsecured loan, you’ll pay a steep cost in exchange for the quick cash.
Take for instance, payday loans. You can borrow from £100 up to £1,000 at a representative APR of 1,000%. The loan is to be repaid in 28 days or on your next paycheck. If you have good credit, loan deals are definitely cheaper. Either way, personal loans shouldn’t be the only option if what you need is only a small amount.
Financial experts recommend credit cards in some cases, as it can be better interest-wise. The premise is that you only need a relatively small amount of money to tide things over. If you have good credit and you only want to borrow £3,000 or less, consider using your credit card instead. The interest rate may be lower compared to standard personal loans offered by major banks in the UK.
Currently, the best personal loans at the most competitive rates available in the UK start from £7,500. The lowest interest rate is 8%. But if you only plan to borrow £3,000 or less then the interest can go up to 14.9%. This is where credit cards can be helpful. If you have existing debt, however, you may want to consider a balance transfer card. Some deals are also interest-free which you should take advantage. Remember though that there may be a transfer fee on some cards from 2.5 to 3%.
Whether you’re borrowing money to pay an existing debt or to buy something, you shouldn’t completely discount credit card as an option. Just make sure that the amount you plan to charge on your credit card is interest-free for the same length that you plan to pay for said loan. For larger loan amounts, however, this is where personal loans from your bank becomes a better option.