0% purchase credit card
When borrowing, consumers should ideally look for the option that charges the least interest – which means a 0% purchase credit card can be a great option. Borrowers can spend on the card and they will not be charged interest until the interest-free term has ended, giving them time in which to pay back the money without having to incur interest charges on the debt. At the moment, the longest interest-free term on a 0% purchase credit card that does not charge a monthly fee is 20 months, which is being offered by TSB, M&S Bank and Sainsbury’s Bank.
The drawback with a 0% purchase credit card is that it can take several weeks for the application to be processed, which means it is likely too late to receive a new card before Black Friday (27 November 2020). However, there are alternatives…
A personal loan has the advantage over a 0% credit card in that the loan application can be accepted and the money received within days, sometimes even the same day. But the borrower will be charged interest from the moment the money is received. For those looking to borrow £1,000 over 12 months, the lowest APR on a loan that is available to both new and existing customers is AIB’s Personal Loan, which charges 12.30% APR. This would result in interest of £64.28 being charged on the £1,000 loan and the borrower would have to pay £88.69 in monthly repayments.
One of the most expensive ways to borrow money is using an overdraft, but these have the benefit of often already being available to consumers through their current account, or can be applied for quickly and easily. Although some bank accounts will offer 0% interest on overdrafts up to a certain limit, these accounts are usually only available to high earners, with overdrafts typically attracting rates as high as 39.90% EAR. As a result, borrowers should only use an overdraft if they are able to repay the money quickly to avoid the high interest charges.
You can read more of this story online, or start the process of applying for credit by making sure your credit score is up to scratch.