Credit & Debt Borrowing Options Compared UK — Loans, Cards, and Alternatives Compare all the ways to borrow money in the UK. Personal loans, credit cards, overdrafts, family loans, and more — costs, pros, cons, and which to choose.
10 March 2026
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3 min read
Whether you need to fund a large purchase, cover an emergency, or consolidate existing debt, understanding the full range of borrowing options helps you choose the cheapest and most suitable way to borrow for your situation.
Borrowing Options at a Glance Method Typical APR Amount Term Best For 0% credit card 0% (promo) Up to £10,000 6–24 months Short-term, planned purchases Personal loan 5–15% £1,000–£25,000 1–7 years Larger, fixed-term borrowing Arranged overdraft 35–40% EAR £100–£3,000 Flexible Very short-term (days) Balance transfer card 0% (promo) Up to £10,000 12–30 months Moving existing card debt Remortgage/further advance 4–6% £10,000+ Up to 25 years Homeowners borrowing large sums Credit union loan 3–42.6% APR £50–£15,000 Flexible Affordable, community lending Family/friends 0% (usually) Varies Agreed No/low cost, if relationship allows BNPL 0% (if on time) Varies 4–12 weeks Small online purchases Payday loan 1,000%+ APR £100–£1,000 1 month Avoid — extremely expensive
Detailed Comparison Personal Loans Feature Detail APR 5–15% (depending on amount and credit score) Amount £1,000–£25,000 Term 1–7 years Payments Fixed monthly Early repayment Usually allowed (up to 58 days’ interest penalty) Credit check Yes
Best rates (under 6%) are typically for amounts of £7,500–£25,000 with good credit.
Use our personal loan calculator to estimate costs.
Credit Cards Type Best For Key Benefit 0% purchase Planned large purchases No interest for up to 24 months 0% balance transfer Moving existing card debt No interest on transferred debt Rewards/cashback Everyday spending (paid in full monthly) Earn rewards on spending Credit builder Building/rebuilding credit Accessible with poor credit
Overdrafts Feature Detail Cost ~40% EAR (since 2020 standardisation) Limit Varies (usually £100–£3,000) Suitable for Very short-term (days, not weeks) Risk Easy to remain overdrawn; expensive long-term
Credit Union Loans Feature Detail APR 3–42.6% (capped by law) Amount £50–£15,000 Access Must be a member (usually based on location, employer, or community) Benefits Often more flexible, ethical lending, may lend when banks decline
Borrowing Against Your Home Method APR Risk Remortgage 4–6% Home is at risk Further advance 4–6% Home is at risk Secured loan 5–10% Home is at risk Equity release 5–7% (compounding) Reduces estate value
Warning: Securing debt against your home means your property can be repossessed if you do not keep up payments. Only consider this for very large sums where the lower rate significantly reduces cost.
Cost Comparison: Borrowing £5,000 Method Monthly Payment Term Total Cost Total Interest 0% credit card £277 18 months £5,000 £0 Personal loan (6%) £97 5 years £5,800 £800 Personal loan (10%) £106 5 years £6,370 £1,370 Overdraft (40% EAR) Flexible 5 years £9,000+ £4,000+ Credit card (22% APR, min payments) ~£100 (reducing) 7+ years £8,000+ £3,000+
Decision Framework Step 1: Do You Need to Borrow? Consider First Instead of Borrowing Can you wait and save? Use our savings guides Is there a cheaper alternative? Buy second-hand, cheaper option Can you earn extra? Side hustles Do you have an emergency fund ? Use it (that is what it is for)
Step 2: Choose by Amount and Timescale Amount Short-Term (Under 2 Years) Long-Term (2+ Years) Under £1,000 0% credit card, overdraft (days only) Not applicable £1,000–£5,000 0% credit card Personal loan £5,000–£15,000 Personal loan Personal loan £15,000–£25,000 Personal loan Remortgage (homeowners) £25,000+ Remortgage/secured loan Remortgage/secured loan
What to Avoid Product Why Payday loans APRs over 1,000%; designed to trap people in debt Doorstep lenders Very high APR; predatory practices Loan sharks Illegal, dangerous, no consumer protection Guarantor loans Expensive; puts someone else at financial risk Extended overdraft 40% EAR adds up quickly
If you are struggling to access affordable credit, contact a credit union or seek advice from StepChange or Citizens Advice .