Why it’s a great time to borrow

Need a personal loan or credit card? You couldn’t have picked a better time.

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Brits are set to spend an eye-watering £18 billion celebrating the festive season this year, with each of us forking out an average of £397.

This is according to our latest research which also revealed that 30% of those celebrating Christmas are planning to borrow money to cover the cost.

But whatever you might need a cash injection for, the good news is that thanks to increased competition and low interest rates, borrowing is now relatively cheap.

Here’s a look at some of your options…

0% purchase credit cards

If you’re relying on a credit card to cover your Christmas spending or other purchases, using one of the leading 0% purchase cards will give you more time to pay off the balance without racking up interest on what you owe.

The new Post Office Money Matched credit card offers a market leading 0% on purchases for 27 months – although you must spend on the card within three months to qualify.

Make sure you repay the debt before the interest-free period expires, or you’ll have to pay a representative rate of 18.9% APR (variable)*. You can find out more about this card here.

Other competitive cards for spending include Clydesdale and Yorkshire Bank’s Gold MasterCards, which offer 0% on purchases for 26 months. But be aware you can’t manage your account online unless you’re an existing customer and registered for internet banking.

Alternatively, the Sainsbury’s Bank Nectar Purchase credit card offers 25 months’ interest-free purchases and you’ll also earn Nectar points as you spend.

If you apply for your card before December 29, you'll earn four Nectar points for every £1 spent on Sainsbury’s shopping and fuel for the first three months, and two Nectar points for every £1 spent after that. You'll also earn one Nectar point for every £5 spent elsewhere.

Once the 0% promotional purchase offers end on all of these cards, you'll pay a representative rate of 18.9% APR (variable)*.

Balance transfer cards

If you’ve already got outstanding credit card debts that you’re paying a high rate of interest on, consider shifting them to a 0% balance transfer card.

Barclaycard’s Platinum credit card with extended balance transfer offers 0% on balance transfers for 37 months, so long as they are carried out within 60 days. This means you have more than three years to clear your debt without paying interest.

A fee of 3.5% applies but is reduced to 2.55% by a refund if you transfer your balance within 60 days. Once the 0% offer ends, you'll pay a representative rate of 18.9% APR (variable)* so try to clear your balance before then.

Just be aware you can’t shift debt from an existing Barclaycard on to this card. If this applies to you, Virgin Money, Halifax, MBNA and Tesco also all offer 37 months at 0% so there's plenty of choice.

With the MBNA and Virgin cards, you must transfer your balance within 60 days and also note MBNA's 37 month offer is only available until November 30. Transfers to the Halifax card must be completed within 90 days.

The Virgin card has a fee of 2.59% (5% on transfers made after the first 60 days), the Halifax card charges 2.65% (3% after the first 90 days), the MBNA card charges 2.89% (5% after the first 60 days), and Tesco charges 2.9%

The Halifax card also offers £35 cashback if you apply before November 30 and transfer over at least £1,500 within the first 90 days.

Once the 0% promotional offer ends on all of these cards, you'll pay a representative rate of 18.9% APR (variable)**.

Money transfer cards

Money transfer credit cards allow you to move available credit straight into your current account and you can then use this money to pay off an overdraft, for example, or even to help fund your Christmas expenses.

Again, you must be certain you can pay off what you owe within the 0% introductory period.

Virgin Money’s 37 Month Balance Transfer credit card offers 0% on money transfers for 37 months, so long as they are carried out within the first 60 days, but you will have to pay a 4% fee (5% after the first 60 days).

Alternatively, MBNA’s Platinum credit card offers 0% on money transfers made in the first 60 days for a shorter 36 months, but it has a lower 2.99% fee (5% after the first 60 days).

Once the 0% deal ends, both cards charge a representative rate of 18.9% APR (variable)**.

Personal loans

Personal loan rates are continuing to come down, so if you’re looking to borrow between £7,500 and £15,000 – perhaps to fund important home improvements - Sainsbury’s Bank is now offering rates as low as 3.4% APR representative. This is so long as you are borrowing over one to three years and have a Nectar card.

If you don’t have a Nectar card, or need to borrow over a longer period of three to five years, the rate increases to 3.5% APR representative.

Clydesdale and Yorkshire Banks also offer 3.5% APR representative on borrowing of between £7,500 and £15,000, repaid over one to five years.

Should you need to borrow more than £15,000, the good news is that rates are coming down in this camp too.

Sainsbury's again offers 3.4% APR representative on borrowing of between £15,001 and £19,999 paid over two to three years and so long as you have a Nectar card.

If you don't have a Nectar card or need to borrow over three to five years, you'll pay 3.5% APR representative.

Meanwhile, if you’re a Nationwide current account customer looking for a loan, the building society has pledged to undercut any like-for-like competitor offer by 0.5%.

Nationwide’s current loan rates are 3.6% APR representative if you want to borrow between £7,500 and £14,999 over one to five years, and 3.9% APR representative if you want a loan between £15,000 and £25,000 over the same timeframe.

Getting the best deal

Remember, to qualify for the very best credit card and personal loan deals, you’ll need to have a top-notch credit rating.

It’s therefore worth using the MoneySuperMarket Smart Search tool as this will tell you how likely you are to be accepted for a particular deal without leaving a mark on your credit file.

 

*Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable).

**Virgin, MBNA and Tesco cards: Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable).

Halifax card: Representative Example: If you spend £1,200 at a purchase interest rate of 18.95% p.a. (variable) your representative rate will be 18.9% APR (variable).

All credit cards and loans are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See MoneySuperMarket.com for further information.

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Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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