# Deal with your debts
Being pursued by moneylenders for cash you don’t have is a standout amongst the most distressing things that can transpire. What’s more, stressing over whether you’ll have the capacity to meet your next home loan or advance installment is positively enough to keep you up around evening time.
In any case, putting your head in the sand and attempting to disregard the issue is most likely the most noticeably awful thing you could do.
In case you’re agonized over paying your home loan, a snappy call to your bank could be the arrangement. Numerous banks or building social orders offer transient installment occasions to those in budgetary boiling hot water – yet they will be a great deal less thoughtful in the event that you just reach after you have begun missing installments.
In case you’re an occupant, your lease ought to be your money related need similarly as home loan installments – you would prefer not to out the rooftop over your head at hazard.
Other ways to reduce the debt-related stress include consolidating several balances on to one credit card with a long 0% interest balance transfer period (you will need to pay a transfer fee) or using a loan with a competitive rate of interest to clear other high interest debts.
# Catch the savings bug
It can seem hard to put a little aside each month, particularly when cash is tight. But the peace of mind of knowing you’re building a nest egg is priceless, and there are savings accounts to suit every circumstance.
# Get a better deal
It’s a horrible feeling thinking that you are somehow missing out on a better deal.
But that’s probably exactly what is happening if you have not compared financial products such as your mortgage, current account and credit card with the best offers around for a while.
Several of the best two-year fixed-rate mortgage deals on the market at the moment have headline rates of around 1.50%, way below the 4%-plus standard variable rates.
And current accounts often pay higher rates of interest than savings accounts when you agree to pay in a certain amount each month and pay a monthly fee.
# Protect yourself
Taking out insurance is certainly not one of the most exciting things in life, but it is one of the best ways to know that you and your family are protected should anything go wrong.
After all, not having an insurer to cover fire damage to your home, for example, could mean total financial devastation, as could you dying and not leaving a life insurance payout to help your loved ones.
And when it comes to car insurance, you could face a fine of £1,000 or more for failing to have the right cover in place.
To keep your stress levels in check, it makes sense to ensure that all your policies are up to date and offer the cover that you need. Just remember to shop around each year to ensure you don’t pay over the odds.
# Fix your energy prices
The cost of home energy keeps going up, putting an increasing strain on family budgets – and therefore upping their stress levels. However, you can protect yourself from future price hikes by switching to a fixed rate energy deal.
With these deals, the rate you pay for each unit of energy is fixed for a certain period – the longest fixes last until 2017. So if you fix, you bills will remain the same if you use the same amount of energy.
The best deal for you will depend on where you live and how much energy you use (and when). All the information you need to switch to a competitive fixed tariff is on your current bill – and we guide you through the process on our energy channel, so you can find out whether you can save in no more than 10 minutes.
# Bundle your TV, phone and broadband
Grappling with lots of different bills can be confusing and stressful. But the good news is that bundling your TV, phone and broadband together so that you have just one bill for all three could save you money as well as time.
TalkTalk, Virgin and Sky all offer deals of this kind, so why not check out how much you could save – and slash the stress of dealing with all those bills.
Larger borrowing at great rates – You can usually borrow more using a loan than a credit card.
And the good news is if you’re looking to borrow between £7,500 and £15,000, rates are more competitive than ever. In fact, the most competitive rates now hover just above the 3% APR representative mark.
Greater flexibility – Another advantage of a loan is that you can decide how long you need to repay what you owe. If you’re borrowing a large lump sum, you can therefore choose to spread your monthly repayments over a number of years.
You’ll have peace of mind that you know exactly how much you’re repaying each month, and that at the end of the term there will be nothing left to pay.
Higher rates for smaller sums – One of the biggest downsides of loans is that rates are often more expensive if you are only borrowing a small amount.
If you take out a loan of around £3,000, for example, you’ll currently be charged more than 7% APR representative.
Fees – If you want to pay off your loan early, there may be a penalty charge to do this, which is usually equivalent to two or three months’ interest.
Some lenders also charge arrangement fees, which can increase the overall cost of credit.
# Credit cards
Lengthy 0% deals – One of the big advantages of many credit cards is they offer lengthy 0% introductory rates on purchases.
Provided you pay off what you owe during the introductory period, this means you won’t have to pay interest on your borrowing.
The most competitive credit cards currently offer 0% on purchases for more than two years. Just be sure to clear your debt before the interest-free window ends.
Money transfers – Several credit cards also allow you to make money transfers directly into your current account, which can be useful if you need a cash injection, and rates are often much lower than if you were to take out a personal loan.
In some cases, you won’t have to pay any interest on this borrowing for three years or more. But be aware transfer fees can be high – often around 4% – and you should try to pay off your balance in full before the 0% deal ends and interest kicks in.
Consumer protection – Thanks to Section 75 of the Consumer Credit Act, when you buy something costing between £100 and £30,000 using a credit card, the card provider is jointly liable with the retailer if something goes wrong.
So, for example, if you ordered a chair costing £150 and the shop you bought it from goes bankrupt before it is delivered, the credit card provider should provide you with a full refund.
Interest charges – You need to be disciplined about paying off what you owe on a credit card as soon as possible (and definitely before a 0% offer ends), or interest charges can soon mount up. Unlike loans, credit cards don’t require you to clear your balance within a certain timeframe.
Low minimum payments – Minimum monthly payments on cards are often set at very low levels. If you only pay this amount each month, not only will it take you longer to clear your debt, you’ll pay out far more in interest. So try to pay off more than the minimum if you can.
Low credit limits – Another downside is that credit cards usually don’t offer particularly high credit limits, so if you need to make a big purchase, you may not be able to borrow the sum you need.
# What is an personal loans?
An individual advance is otherwise called an unsecured advance and is a method for acquiring cash from a loan specialist, for example, a bank or building society. You pick the sum you wish to obtain and the timeframe you need to get it over inside given parameters. The bank will then choose whether or not to acknowledge you as a client on those terms, in light of your financial assessment.
Unsecured individual credits, with which you don’t need to set up a property as security, are by and large accessible for measures of amongst £1,000 and £25,000 over terms of one to five years – however 10 years is now and then conceivable. Be that as it may, they are for the most part at their least expensive for amongst £7,500 and £15,000 over somewhere around three and five years. In any case, you make standard month to month reimbursements to pay back everything of capital in addition to enthusiasm at the concurred rate.
# What is a secured loan?
With secured or homeowner loans, you have to use your property as security against the loan. This means that they are only available to homeowners, and that if you default on your repayment you could lose your home.
You can borrow up to £100,000 with a secured loan and the maximum amount of time for repaying the loan is a lot longer at 25 years. Loans of this kind are therefore suitable for those looking to borrow larger amounts. As with personal loans, the repayment terms will generally involve fixed, monthly payments.
# What other types of loan are there?
You may see loan providers talking about car loans or home improvement loans, but there are just unsecured, personal loans by another name.
The same is true of the loans offered by peer-to-peer lenders, the difference being that you borrow from other individuals keen to earn interest on their savings.
# What factors affect the cost of a loan?
When choosing a loan, the first aspect to look at is the interest rate. The higher this is, the more you will pay back overall. And the bad news for people with low credit scores is that the lowest interest rates are generally reserved for borrowers with higher scores because they are seen as less of a risk by lenders.
Other factors to check include whether there are any fees, such as early repayment or arrangement fees that could affect the overall cost of the loan.
Finally, compare loan conditions before making your choice – some are more flexible than others and may even offer the option of a payment holiday of say two or three months at the start of the agreement.
# Will I qualify for a loan?
As explained above, whether or not you qualify for a personal loan will depend on your credit score. If you have a low score, for example because you have defaulted on debts in the past or had a County Court Judgment (CCJ) recorded against you, it is therefore unlikely that you will be accepted by lenders offering top deals.
You can take steps to improve your situation by applying for a copy of your credit report to check all the information held is accurate. You should also stay on top of all your bills and debt repayments. Secured loans can be a good option for anyone whose low credit score makes it hard for them to get a low-rate personal loan – so long as they are a property owner. But remember your home will be at risk.
# What is the representative Annual Percentage Rate (APR)?
The representative APR quoted in loan advertisements is the headline interest rate figure the lender uses for marketing purposes. This does not mean that everyone who is accepted as a customer will pay that rate, though.
Many lenders calculate the APR of a personal loan using a system called risk-based pricing, which means the rate you are offered depends on the strength of your credit profile. And under current European Union rules, lenders only have to offer this rate to 51% of the people they take on as borrowers. The remainder can be offered a higher rate, which they can then choose whether or not to accept.
# What are early repayment penalties?
Early repayment penalties, or redemption fees, are generally charged when borrowers want to repay their loans before the agreed term to compensate the loan provider for the resulting loss of interest.
A typical penalty could be equivalent to one or two months’ interest, although the penalties charged will often fall towards the end of the loan agreement.
Those keen to avoid redemption fees should look for flexible loans that can be paid off early penalty-free.
# What is Payment Protection Insurance (PPI)?
PPI is designed to pay your loan, mortgage or credit card repayments if you fall ill or lose your job. However, the terms and conditions of the cover tend to be very strict and riddled with exclusions. And in the past, lenders have come under fire for insisting that borrowers take out linked PPI policies alongside their loans.
Most providers no longer do this, but if you are offered a PPI policy, it is worth remembering that standalone cover should work out cheaper and will also protect all your debts, rather than just this loan.
The rise of social media usage in the last one decade has changed so much the way business is done. Businesses are now using social media services to reach out to more customers, create awareness of new products and services as well as a platform for facilitating the customer service. In the banking industry, there is a tremendous change. There are a lot of institutions using social media in order to help the clients, both potential and current, access credit as well as opening accounts. Keeping up with the trend, it is very possible that the use of social media can greatly determine the future of the banking sector.
From the social media, there has been an emergence of Financial Technology as an industry on its own. This integrates different companies in making the delivery of financial services more efficient. Below are some of the major ways that the social media has positively changed the delivery of the financial services.
- As a marketing platform.
With the huge numbers of people spread across different social media platforms, banks have embraced this as a significant way of marketing their products and services. Many financial institutions, such as, fnbnorcal.com/uses these platforms to reach out to more customers and tell them about their wonderful credit facilities that fit every person in different age groups and careers.
It is now evident that even the traditional companies are not willing to be left behind in integration of social media in their businesses. Actually, in the modern days we are living, you, as a business, are likely to lose a lot of potential clients if you do not use the social media platforms as your marketing channel.
- Delivery of customer services.
This is a very vital aspect of any financial institution. There are many customers, both new and old with lots of queries regarding their account. With the huge number of people using these social media platforms to interact and learn, they will also use it to enquire more on their accounts. As a bank, it is important to have a chief customer service officer who will see to it that the customers’ queries are being answered on time and to their satisfaction. While tending to the customers, the clients’ personal information should not be disclosed to any third party.
- Cost reduction while still improving the service efficiency.
The rise in social media has seen a huge reduction in the costs of delivering the much needed services to the clients. There is a rise in the number of financial institutions that are using social media platforms to process applications efficiently. Similarly, social media has greatly eased the way the customers are tended to.
This has overall brought about customer satisfaction thus increasing the customer base as well as the conversion rates for the institutions’ social media followers.
Some may not believe this but the truth is, not all debts are completely bad. Many are even very judgmental as far as taking personal loans is concerned. What they don’t realize is that these loans can be very powerful in offering great benefits to help you manage your financial obligations.
Different people apply for personal loans for different reasons. Here are the most common ways on how they use these loans. Also, when getting these loans, we recommend finding a trusted source for them. We recommend using instant same day payday loans, as they are one of the must trusted personal loans sites on the web today!
Top Ways People Use Personal Loans:
Home Improvement/Renovation Costs
You probably dream to add some new features to your home and make it the house that you have always dreamed of. Since it might not be possible to apply for renovation loan since this comes packaged with a home loan, a personal loan is the best solution. In general, financial through personal loans have lower costs as compared to home loans.
Medical Emergencies or Issues
How often do you find yourself wondering how you can pay for emergency treatments should they happen? Medical bills can be a real burden, especially unforeseen or unexpected ones and it could be a struggle to pay for them straight from your pocket.
Instead of worrying and waiting on how you can pay your medical bills, personal loans can be used for covering medical expenses right away.
Among the most common ways people use their personal loans is to consolidate their existing debts or loans to a single loan. Debts like overdraft on bank account and credit cards can add up wherein you need to pay for different interests. On top of that, you have to budget your money properly so these will all be paid back right on time. Through consolidating these debts to a single personal loan, this can help you save interest and make it possible to plan better on how to pay back with a grand total amount of loan.
It is always a good decision to continue your studies to further your career growth in the near future. But, if you are short of savings, you just give up the process, especially if you can’t get a student loan.
For most people, personal loans are the practical solution for covering their tuition fees and other extra expenses for their studies. Instead of holding yourself back, you might as well pursue it and count on a personal loan to help you out.
It can be very stressful to plan that perfect wedding that you have always wanted since you were a kid. Would it be wise to use a personal loan to cover your wedding’s cost? In some cases, a personal loan speeds up the process, especially if you already have a set date in your mind. Aside from that, if the wedding returns can cover this cost, there is simply no reason to put in hold for a long time.
The Bottom Line
Personal loans are usually fast and easy to apply for. This lump sum of cash will be able to help you in more ways you can imagine to achieve your goals. For more information about personal loans visit Wikipedia Loan Education
# Work out the amount you owe
With home loans, Mastercards and credits all piece of ordinary cutting edge life, it can be difficult to monitor what you owe. Be that as it may, you can’t work out how handle your obligations until you know the sort of aggregate you have to pay off.
Take a seat and make a rundown of the considerable number of banks and different loan specialists you owe cash to (aside from your home loan moneylender). The aggregate figure may be somewhat of a stun, however this is the total that you have to manage on the off chance that you need to be without obligation and it’s the main place to begin.
# Consolidate your debts
Once you know how much unsecured debt – which includes credit cards, store cards, personal loans and overdrafts – you have, the next step is to work out how much interest you are paying on those debts.
For example, you might have a personal loan at an Annual Percentage Rate (APR) of 7%, an arranged overdraft at 18% and two credit cards, one at 15% and one at 18%.
However your debt burden is comprised, you will find it a lot easier to manage if you move the total to one place – and, if you choose this place wisely – a lot cheaper too.
# Slash your interest charges
The right new home for your debt will depend on how much you have and where it’s held. If you owe £5,000 on a credit card for example, then a 0% balance transfer credit card will mean you stop paying interest on that debt altogether. In other words, your repayments will be used solely to pay off your capital balance.
Borrowers with good credit scores can currently get up to 29 months interest-free withBarclaycard’s Platinum Extended Balance Transfer Credit Card (subject to a fee of 2.79% of the debt being transferred) or 15 months at 0% with the Halifax All in One Card, which charges a fee of just 0.8%.
If, on the other hand, you owe into double digits across a range of borrowing, one low-rate personal loan could be the best option. Not only do personal loans generally allow you to borrow larger amounts, they also come with a fixed repayment plan that will help less organised borrowers get back on track.
The good news is, the cost of personal loans is at rock bottom at the moment – especially on medium-sized borrowing of between £7,500 and £15,000.
# Talk to your lender(s)
If you are already at the stage where you have been forced to miss payments because your debt burden is too heavy, the best advice is to seize the day.
If, for example, you are worried about meeting your mortgage payment (which, alongside rent payments, should always be your first priority), a phone call to your mortgage lender could be the start to the solution.
For example, your lender may agree to extend the term of the loan which will reduce your monthly payments, temporarily move you onto an interest-only deal, or even give you a payment holiday while you get back on your feet. It will be much less sympathetic if you only get in touch after you have started missing payments.
# Seek free debt advice
Switching to cheaper deals or talking to lenders is all very well. But for people with real debt problems, it could be too little, too late.
Even if your debts are really getting on top of you, though, it’s never too late to take action.
Contact a free debt advice charity such as StepChange which will help you decide the best way out. This could be anything from a Debt Management Plan to an Individual Voluntary Arrangement (IVA) or even filing for bankruptcy.
But at least your road to financial recovery will have started.
On the off chance that you have Visa obligations, your money related need – whether it’s a New Year or not – ought to pay them off as fast and as inexpensively as could reasonably be expected.
What’s more, changing them to a 0% Mastercard or paying them off with an ease credit, are two keen approaches to get on the way to budgetary flexibility.
In any case, with individual advance rates at record-breaking lows, and a heap of splitting Visa bargains hitting available, which would it be a good idea for you to carry out the employment?
Both alternatives have upsides and downsides. That is the reason we’ve investigated the arrangements accessible so you can settle on the right decision and quit being a borrower (beside a home loan on the off chance that you have one), within the near future.
# Personal loans
If you are considering taking out a personal loan with which to pay off credit card debt, the good news is there’s never been a better time to bag a bargain interest rate.
Loan providers are locked in a price war that has driven rates down to the lowest ever level. We have a new exclusive deal with the AA for example, which charges just 4.6% (representative) on borrowing between £7,500 and £15,000 – whether you are a member with the AA or not.
On the off chance that you are thinking about taking out an individual advance with which to pay off Visa obligation, the uplifting news is there’s never been a superior time to pack a deal financing cost.
The deal, sits joint market leading with Sainsbury’s Bank which has recently cut rates to 4.6% on its Shopper Standard Loan for the same borrowing amounts. This representative APR applies to loans taken from three to five years, though. If you want to borrow for a shorter period, the APR goes up to 4.7%.
M&S Bank has also slashed rates on its one to five-year Cardholder Loans of between £7,500 and £15,000 to 4.7%. Although, as the name suggests, this is for M&S current account customers only. For new customers, the representative APR is a fixed 4.8%. Clydesdale and Yorkshire banks however, have also pegged their personal loan rates down to 4.7% in deals which are available to all.
As long as your credit score qualifies for these deals, you can therefore borrow at well under 5% and enjoy the security of knowing that you will be debt-free at the end of the term of fixed monthly repayments for which you sign up.
But what if you don’t owe as much as £7,500? Rates on these so-called mid-range loans (from £7,500 to £15,000) are the cheapest on the market – and also tend to be the preferred battleground for lenders vying to top the best buy tables. Rates on loan amounts that fall either side of these upper and lower thresholds are more expensive.
The new M&S rates, for example, are set at 6.1% APR for loans of between £5,000 and £7,499 and at 6.7% APR on between £15,001 and £25,000.
And loans on small amounts, say £2,000, will pay much more at 18.5% APR.
In any of these cases, loans become much less appealing – especially when you can avoid interest altogether by taking out a 0% balance transfer credit card.
# Credit Card
If loan rates are looking good at the moment, they are certainly not outshining the deals available on balance transfer cards, which now offer up to an incredible 30 months at 0%.
That’s the interest-free period currently being offered by the Barclaycard Platinum Credit Card with Extended Balance Transfer.
The length of the 0% offer means you get almost two and a half years to pay off your debts without paying a penny in interest. You will, however, have to pay a fee – in this case 2.89% of the balance being transferred.
If you can clear your debts in a shorter time frame, it makes sense to look at other cards with lower balance transfer fees.
These include the Lloyds Bank Platinum 24 Month Balance Transfer Card and the Bank of Scotland Platinum Credit Card, both of which allow you 24 months at 0% to clear your debts for a fee of 1.5% (both of which are refunded from 3%).
You can pay even less if you can manage with just 12 months to clear your debt balance transfer. The Fluid Low Fee Balance Transfer deal offers 0% for this long for a 0.75% fee.
And Barclaycard offers the same time for a 0.79% fee (refunded from 1.2%) on its Platinum Balance Transfer Card with Low Fee.
Balance transfer fees charged by the card companies behind all the longest 0% deals are not the only disadvantage to using a credit card to pay off your debts.
You also need to bear in mind that you will end up paying the representative APR on the card if you fail to clear your debts in time.
The APR on the Barclaycard Platinum Credit Card is painfully high at 18.9%, while the APRs on the Lloyds and Bank of Scotland cards are not much lower at 17.9%. Bear in mind these APRs are also representative so could even be higher. But running over by just a month or two could cost you a serious amount of money.
And that could happen if you are undisciplined, or really struggling to make ends meet, which is why the fixed repayments required over a fixed time on personal loans are a better way for some people to clear debts.
Balance transfer card providers also limit their top deals to new customers. So anyone with debts on a Barclaycard, for example, will not be able to benefit from the longest 0% deal on the market, regardless of their credit score.
# Still unsure?
The summaries below should help you to make a decision if you are still undecided as to whether a credit card or a loan is best for you.
# Opt for personal loan if you :
- Owe more than £7,500
- Need more than 2.5 years to pay off your debt
- Can struggle to live within your means
- Like the security of fixed repayments
# Take out a 0% credit card if you :
- Owe less than £5,000
- Are disciplined enough to stick to your own repayment plan
- Can definitely pay your debt off in 24-30 months
- Want to avoid paying interest altogether
# Utilizing your investment funds
The fortunate thing about utilizing your reserve funds for home enhancements, instead of for occasions or another auto for instance, is that – and also making your surroundings a more pleasant place – you are making a speculation. The right enhancements can build the estimation of your home exponentially. Case in point, a cutting edge lavatory could add as much as 3% to its sticker price, while an OK new kitchen could include 5%, as per assessments.
On the off chance that you have money to hand, utilizing it to finance your home changes could be the most sensible choice – particularly with investment funds rates so low. Be that as it may, if your cash is tied up in an altered rate security for instance, it may not be worth paying the related punishment to get the money out – on the off chance that you can get it out by any stretch of the imagination. Keep in mind additionally, that on the off chance that you pull back assets from a money ISA, you won’t have the capacity to beat up your recompense again inside the same assessment year.
The main downside to paying directly with cash, however, is that you will not be protected should anything go wrong, such as the company carrying out the work going bust or even turning out to be fraudsters. So, even if it’s just the deposit, putting the cost on a credit card and then using your cash to pay it off is a good idea, as I go on to explain.
# Putting it on a 0% purchase credit card
If you use a credit card to pay for your refurb and the work turns out be faulty or even never gets completed because the company goes bust for example, you’ll be able to claim the money back from your card provider.
This is the case even if you only pay for the deposit on your card –so long as the total bill comes to between £100 and £60,260, you’ll be covered under the terms of either the Consumer Credit Act 1974 or the more recent Consumer Credit Directive. Once you’ve used your card, this protection is locked in place.
If you’ve not got the money squirrelled away in savings to clear the balance with, you should get a card that charges an introductory 0% on purchases. This will enable you to clear the cost (preferably by monthly direct debit) during this interest-free period.
Santander’s Credit Card for Purchases and Tesco’s Clubcard Credit Card for Purchasescurrently come with the longest interest-free period on new purchases, both offering 18 months at 0% before jumping to a representative APRs of 18.9% (variable).
If you regularly shop at Tesco, the Clubcard credit card could be the deal to go for, as it enables you to rack up the Clubcard points faster. You get one point for every pound you spend in Tesco and one point for every four pounds you spend elsewhere.
However, if you are planning on clearing your debt, sooner, why not throw in some cashback instead…?
#Interest-free purchases with cashback
The American Express Platinum Purchase Cashback card for example, offers 16 months at 0% interest as well as 1.25% cashback on all purchases – meaning you not only get to spread the cost of your home improvements without paying interest, you actually get money back on them.
Once this 16-month honeymoon period is up, you’ll be paying an APR of 18.7% (variable) once the card’s £25 annual fee is factored in.
Alternatively, if you bank with Nationwide, the Select Card offers 15 months at 0% on new purchases and 0.5% cashback. You will then be charged a representative APR of 15.9% (variable).
However, if your credit card limit won’t stretch to the cost of your home improvements, unsecured personal loans are also offering great value at the moment with rates at their lowest ever.
# Personal loans
If you’re planning major improvements such as converting the loft or adding a conservatory then you can easily be looking at spending upwards of £10,000 – in which case a personal loan could be the way to fund it.
Sainsbury’s Bank, which took the gong for best loan provider , has just lowered the APR on its standard personal loan to a market-leading and all-time low of 4.4% APR. This rate applies to borrowing of between £7,500 and £15,000 and you can choose a repayment term of between one and three years. If you need longer to repay, Sainsbury’s has also reduced its rate on the same-size borrowing to an APR of 4.5% against a four or five year repayment term.
Santander offers a slightly higher rate of 4.5% on the same levels of borrowing to everyone – but goes further for existing customers, by extending the same loan to £20,000 instead. If your improvement project is a particularly big one, it could even be worth making the switch to its 123 account before you apply.
Then there’s one final option – letting your home raise the money for its own improvements…
#Using your home
If you’re planning on building an extension then it might be worth approaching your mortgage lender to see if you can free up some cash with a further advance. However, borrowing extra against the value of your property is not a decision to be taken lightly. The additional funds may not be offered at the same rate as the rest of your mortgage for example, and could even tie you in for a certain period. If this doesn’t tally with any tie-ins on your main mortgage, things can get tricky when it comes to renewing your deal.
If however, your current mortgage deal is coming to an end, you could move the whole loan – plus the extra required for the work – to one lower rate. For instance, the West Brom Building Society is offering a market-leading fixed rate of just 1.48% for two years before jumping to 3.99%.
Final tip! Once the work is done, make sure you notify your insurer to make sure your home insurance is completely up to date – failure to do so could invalidate your policy.
Cash exchange cards, some of which don’t charge enthusiasm for more than TWO-AND-HALF YEARS, can be less expensive and more adaptable than taking an individual advance – which is the conventional first port of call for money loaning.
What are cash exchange charge cards?
So how do cash exchange cards function? The arrangements resemble adjust exchange cards (where your Mastercard obligation is changed starting with one supplier then onto the next which doesn’t charge premium) – just for this situation, the adjust is paid as money into your present record.
Like 0% adjust exchange bargains, 0% cash exchange cards charge an expense – regularly around 4% of the sum you acquire. This thinks about to around 3% for the longest 0% adjust exchange cards.
# So what are the best deals out there?
-The MBNA Platinum Credit Cardcharges a leading 0% for 31 months – that’s more than 2.5 years – on money transfers. Also offers 0% on purchases for first three months. Fee is 4%.
-Virgin Money’s Credit Card (which comes with perks including a £50 wine voucher) charges 0% for 29 months on money transfers. Also offers 0% on purchases for first six months. Fee is 4%.
–MBNA’s Everyday credit card charges 0% for 21 months on money transfers BUT offers a leading 11 months at 0% on purchases. Fee is 4% (but if you are just doing a balance transfer it’s super-low at 1.5%).
-The Leeds Building Society credit card charges 0% for 24 months on money transfers. Also offers 0% on purchases for three months). Fee is 4%.
So, while you wouldn’t pay interest on your cash borrowing for these 0% durations, transferring, say, £3,000 into your current account with any of these cards would cost £120.
The brands may be different but, in fact, all these cards are issued by MBNA. They all come with high APRs too – typically18.9% (representative and variable) which kick in after the stated interest-free borrowing is up. But what if you can’t commit to clearing your debt by then?
-In this case, MBNA’s Low Rate Credit Card charges one market-leading rate on money transfers of 6.5% (variable and representative) and NO money transfer fee.
# Personal loans Vs money transfer cards
But what about personal loans? There are some fantastic rates around at the moment which charge APRs of less than 6.5%?
You can, for example, borrow £10,000 over two years with HSBC at just 3.9% APR – and it comes with no fees.
# Money transfer cards can still be cheaper!
But here’s the rub: even if you have an excellent credit score borrowing smaller amounts is much more expensive.
Still over two years, the best deal on £3,000 borrowing for example is from Hitachi priced at7.8% APR.
And if you want to borrow just £1,000 from a mainstream lender, Sainsbury’s Bank sits top of the tables, despite charging a whopping APR of 18.4%.
So, for smaller borrowing, money transfer cards can work out a lot cheaper.
# Money transfer cards can be more flexible!
The other advantage of plastic over a loan is that it’s easier and cheaper to clear your debt as and when you want to.
You can pay off your credit card monthly – or in any sized chunk you like. But personal loans come with a set number of fixed payments and if you clear the debt early…
…you can be charged up to 58 days’ interest under the Consumer Credit Regulations 2004
… you could also be charged a one-off fee. HSBC, for example, charges one month’s interest to redeem its personal loan ahead of time.
# Cash from money transfer cards can be quicker!
Finally, if you need cash in a hurry, a money transfer card can also prove a quicker way to access it.
If you are accepted for a money transfer deal with MBNA before 4.30pm, the cash will hit your account the very next day. This can compare to a week or more with some personal loan providers.
# But beware…!
But money transfer cards which offer a 0% introductory period are ONLY beneficial if you can clear your balance within the stated time.
Fail to do this and the high interest rates that kick in could end up costing you way more than any of the loans mentioned above.
What’s more, unlike loans, APRs on credit cards are variable so COULD go up while your debt is still outstanding.
As far as the MBNA’s 6.5% Low Rate card goes, so long as you qualify for this rate (and this will depend on your credit score), it’s currently the cheapest way to borrow £3,000 over two years.
Have a balance languishing beyond that though and the best loans could start to look cheaper.
Nonetheless, you should always remember that securing an advance against your property could prompt you losing your home should you get to be not able meet the reimbursements.
Here, we clarify the masters, and the cons, of secured credits and offer a few tips on getting the most ideal arrangement for your conditions.
What is a secured advance?
With a secured or mortgage holder credit, you utilize your property as security against the sum you obtain.
Banks are glad to loan more over a more extended period than they will with unsecured, or individual, advances subsequently.
Furthermore, that implies you can for the most part get up to amongst £50,000 and £120,000 over a greatest term of 25 years.
Likewise with individual advances, the reimbursement terms will by and large include altered, regularly scheduled installments and you will confront early reimbursement punishments (see beneath for a clarification of how these function) on the off chance that you need to pay the advance off before the concurred term.
# What are the advantages?
Secured loans can prove easier to qualify for than unsecured borrowing – mainly because the lender concerned knows it can reclaim any losses from the sale of your property should you default.
If you have a less-than-perfect credit file, a secured loan may therefore prove your only option.
As mentioned above, secured loans are also a useful way of accessing larger amounts of say above £25,000.
Few unsecured lenders will allow you to borrow above this amount, while the lowest rates are often reserved for those who borrow no more than £15,000.
Secured loans can also be paid back over a longer timeframe.
You can, for example, obtain a secured loan over 25 years.
With unsecured loans, on the other hand, most of the best deals require you to repay the full amount within about five years.
# What are the disadvantages?
While the interest rates on offer to secured loan customers with good credit scores are low, those available to unsecured loan borrowers with similar credit histories are lower still.
At the time of writing you can shave almost 2% off your loan rate by going for the market leading unsecured loan rather than the best secured deal.
The penalties if you become unable to repay a secured loan can also be more onerous – notably if your home is repossessed and sold off to clear your debt.
And you are unlikely to find a secured loan offering the flexible features, such as overpayments and payment holidays, now available from some unsecured lenders.
The bad news for people with low credit scores, meanwhile, is that – as with unsecured loans – the lowest interest rates are reserved for borrowers with higher scores.
While a secured loan may be available as long as you own your own home, you may therefore end up paying more than double the interest charged on the market-leading deals.
# Is a secured loan right for me?
First things first, you will not qualify for a secured loan unless you own your own home.
If you are not a homeowner, there is therefore no point applying for a loan of this kind.
Those looking to borrow smaller amounts may also be better off with a personal loan, especially if the amount required is £15,000 or less.
The general rule of thumb is that an unsecured loan is probably a better choice unless you need to borrow a very large amount, require a long repayment period or will not qualify for an unsecured arrangement because you have defaulted on debts before or are self-employed, for example.
Either way, check the interest rate (often called the representative APR – see below for an explanation) as well as any charges, such as early repayment or arrangement fees, that could affect the overall cost of the loan before making your choice.
# What is the representative Annual Percentage Rate (APR)?
The representative APR quoted in loan advertisements is the headline interest rate figure the lender uses for marketing purposes.
This does not mean that everyone who is accepted as a customer will pay that rate, though.
Under current European Union rules, lenders only have to offer the “representative” rate to 51% (or more than half) of the people they take on as borrowers.
If your credit score is lower than the average, you may therefore be only accepted as a customer if you agree to pay a higher interest rate.
This process is called risk-based pricing and is designed to ensure that borrowers who pose the lowest risk to a lender (or in other words are the least likely to miss payments) pay the lowest rates.
# What are early repayment penalties?
Early repayment penalties, otherwise known as redemption fees, are generally charged when borrowers want to repay their loans before the agreed term.
Lenders impose them as a source of compensation for the interest payments they miss out on due to the loan being cleared in a shorter time.
A typical penalty could be equivalent to one or two months’ interest, although the penalties charged will often start to fall as you approach the end of the loan agreement.
Since a couple of hundred pounds is a generally little level of obtaining, you may be enticed by a payday advance. This truly should be kept away from however, as it’s a costly type of obtaining – and an unsafe one on the off chance that you can’t clear the obligation in full before the month’s over. It could even influence your odds of getting a home loan now new more tightly principles have been acquired.
Contingent upon the amount you need to acquire, you may need to simply utilize a charge card as of now in your wallet. On the off chance that you can fork over the required funds before the end of month, this is a feasible alternative. In the event that you don’t clear the adjust, be that as it may, you can ordinarily hope to fork out enthusiasm at around 18%.
# …£1,000 to £7,500
At the lower end of this scale, a 0% purchase credit card can give you as long as 18 months to pay down the balance. For example, the Santander 123 Credit Card charges 0% interest on spending for 18 months, while paying cashback of up to 3.00% on travel and household bills.
If, for example, you wanted to borrow £1,000 for a new sofa, you could use the card to get one at John Lewis, give yourself a year and a half to spread the cost and earn 2.00% (£20) cashback in the process. You’ll need to clear the balance in 18 months, though, or else you’ll pay interest at a representative 16.5% APR.
If you are not buying anything but want to borrow to pay off more expensive debt for example, consider a card that offers 0% money transfers. A money transfer allows you to take agreed credit as cash from your card which is then paid directly into your current account.
Most of money transfer deals are offered by card giant MBNA which has just improved some of its football credit cards to now offer 29 months’ interest-free on cash transferred into your account for a 4% fee. You can read more about this in Les Roberts’ article. The best deal though (also from MBNA) is its Platinum Credit Card which offers 30 months at 0% on money transfers with the same 4% fee.
Another port of call for borrowing of this size is a personal loan. Loan rates have been plummeting recently – as we explain in our in-house research here – though the very cheapest deals (which are as low as 4.3% APR) are only available on borrowing between £7,500 and £15,000.
However, you can still borrow £3,000 over three years with Hitachi Personal Finance at a representative 7.8% APR, meaning you’d pay £374.28 in interest.
# …£7,500 to £15,000
This is perfect personal loans territory because, as we explain above, rates are at all-time lows. You can currently borrow between £7,500 and £10,000 over two to five years with Hitachi Personal Finance at a representative 4.3% APR. At this rate, over five years, a £10,000 loan would cost you £1,131.33 in interest.
This is as low as loan rates get right now, but if you want to borrow between £10,000 and £15,000 there are still some decent deals to be had. For example, you can borrow between £7,500 and £15,000 over one to three years with Sainsbury’s Bank at 4.4% representative APR.
If you borrowed £12,000 over three years at this rate, you’d pay back a grand total of £12,831.37.
# …£15,000 to £25,000
At this borrowing bracket, a personal loan may still be an option as they tend to be capped at £25,000. Clydesdale Bank will lend you £20,000 over five years at a representative APR of 5.8%. The total charge for credit would be £3,005.29, which means you’d pay back a total of 23,005.29.
But in this and all other cases, the loan rate you get is entirely dependent on your income and personal circumstances. And only customers with the best credit scores will get access to the lowest loan rates.
Anything above £25,000 and you’ll be looking at secured loans.
Secured or ‘homeowner’ loans offer a way to borrow larger sums of money by using your home as security. Because of this, they carry a greater risk than unsecured loans. In fact your home may be repossessed if you do not keep up with repayments on a mortgage, loan or any other debt secured on it.
Rates on secured loans currently range from around 5% to 8% and can be paid off over anywhere between one and 25 years. For example, you could borrow £30,000, secured against your home, over 15 years at a rate of 5.2% with Fluent Money. Over the term of the loan you’d pay £12,928.33 in interest.
If you are a homeowner though, and your current mortgage deal is approaching its end, it will almost certainly be cheaper to borrow a little extra when you apply for your next deal. Even if you haven’t paid much capital off your mortgage debt, your home may have increased in value sufficiently for you to qualify for the extra loan. And if you shop around and get a lower mortgage rate than the one you were on, you may even find your monthly repayments stay the same. Nevertheless, don’t take any extra secured borrowing lightly as it can really impact your flexibility and budget in the future.
An individual advance empowers you to acquire money (commonly amongst £1,000 and £25,000) without securing it against your home or some other resource. This is the reason they are otherwise called unsecured credits.
You can generally pick to reimburse whatever you get over terms crossing 12 months to 5 years. The financing cost – and month to month reimbursement – is settled over whatever term you pick.
APRs (annual percentage rates) on personal loans have been steadily falling over the past few years and the best deals now charge less than 4%. But these lowest rates only apply only to mid-sized loans of between £7,500 and £15,000. Borrow either side of these thresholds and you’ll pay much more in interest.
# Best deals
Sainsbury’s – which won Best Unsecured Loan Provider at our 2015 Supers awards – is currently offering a competitive 3.7% (representative) on borrowing between these amounts. But if you’ve got a Nectar card (and don’t need longer than a three-year repayment term) the rate is reduced to 3.6%.
Sainsbury’s is unusual in that it extends its personal loan offerings right up to £35,000 – we covered the news story at the time. But the bank’s rates for bigger loans start at around 7% APR.
Elsewhere, M&S Bank has also slashed rates on its personal loans down to 3.6% (representative), again, for borrowing between £7,500 and £15,000. If you want to borrow over a four or five-year term, this is the lowest rate on record which is accessible to all applicants. Existing current account customers with Nationwide and First Direct will have access to the same 3.6% rate over all repayment durations.
You’ll need to have a cracking credit score to be accepted for any loan this cheap. If you are not convinced of yours, use our Smart Search tool when applying, which will give you an indication of whether you’ll be accepted and won’t leave a footprint on your credit file.
# Loan alternatives
Some personal loans maybe the cheapest in history but, for smaller sums when rates shoot up to mid-double figures, a 0% interest credit card could be a better bet.
If you want cash, MBNA’sPlatinum Credit Card will transfer it into your account interest-free for the first 24 months. The related money transfer fee has also been reduced to just 1.94% if you use MoneySuperMarket.
If you can pop the cost straight on a credit card, Santander’s 123 card won’t charge a transfer fee and is interest-free for 23 months. There is an annual fee of £24, though this is waived for the first year if you have a 123 current account.
While the first part of your borrowing may be interest-free with a credit card, APRs that kick in when the 0% term expires are high (18.9% and 15.5% representative in these two examples) so ensure you clear your balance in time.
This is something worth considering if opting for piano lessons, which can take up to four years to get beyond Chopsticks.