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Cheap Credit Card Loans Use credit cards to get loans as low as 0%

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Even the best buy loan under £2,000 is almost 19% APR. Instead, manipulate a credit card to do it at a fraction of the cost. This is a full how-to guide to turning plastic into a loan, letting you borrow much more cheaply; and overpay or underpay without penalty.

Picking the perfect method

The cheapest credit cards can substantially undercut the cheapest loan rates for certain amounts, and allow totally flexible repayments. But you need to get smart, and make that plastic bend to your will.

There are a couple of possible methods, depending on what you need the money to do. Some are simple, others require a bit of playing about. Pick what you need from the options below.

"It ain't what you do, it's the way that you do it."

  • "I want to cut the cost of existing credit card debts."
    This is easy. Special 'balance transfer' credit cards are designed for this purpose. They pay off one card with a new one, hopefully at 0% for a fixed period. This allows you to pay down the debt quicker.

    If this is what you need to do, don't use the methods in this guide. Instead, read Best Balance Transfers for the full rundown and all the current best buys.
  • "I want to pay off an existing loan."
    If you want to make an existing personal loan cheaper, read Cut the Cost of Existing Loans first, as it isn't always simply a case of getting a lower interest rate to make it cheaper. Sadly, penalties can mean it’s not worth switching - the guide has a calculator to help you work it all out. If it doesn't work for you, try another option from the ones below.
  • "I want to make a big one-off purchase(s), and can pay by card."
    The easiest way to buy whatever you need on a card that has the longest 0% or low rate for purchases. In other words, it's interest-free (or low interest) on debts from spending, though you must make at least the minimum repayments. See the top 0% credit cards.
  • "I need the lump sum in cash."
    moneymountainA lot of things fit into this category, from buying a new car from a garage that doesn't accept credit cards, to paying back a friend you owe money to.

    If you want to keep things simple, or are borrowing a large amount (over about £5,000), check out the normal Cheapest Loans guide.

    For anyone borrowing less, or happy to try something a bit more complex, you can get clever and use credit cards with a special feature to make big savings. Please read the whole of this guide in detail though, and ensure you understand it correctly before proceeding. A mistake could cost you big. Jump down to 'Plastic loans'.

BEST BUYS: If you can use a card to pay

If you're going for the simpler route of spending on a cheap credit card, you'll need to apply for a new one - and remember this means passing a credit score. The crucial thing is to ensure it's fully repaid by the end of the 0% period, or switch the debt to a top Balance Transfer card.

Here are the current best buys - more picks and info in 0% Credit Cards. For more card options, see the credit card guides page.

Pre-apply to check eligibility with NO credit file mark

You'll see that most cards in this guide have a link to our eligibility checker tool, which we've designed to allow you to see the probability of getting the card.

We do a 'soft' credit search which YOU can see, but lenders CAN'T, so it has no impact on your future creditworthiness - and lets you see the chance of you getting the card without applying for it.

We map the details you give us against lenders' criteria, and show your chances for all the 0% and long term purchase cards that we can do so for.

tesco

Tesco - 19 months 0%*Plus collect Clubcard points on spending

The longest 0% spending card available is Tesco's* 19-month Clubcard Credit Card, which is the longest 0% purchases card we've ever seen.

How to turn it into a loan: The big danger of using a card as a loan is that you choose your repayments, so there's a temptation to spend more later. Proper loans are fixed to clear the debt in a set time and you can't borrow more.

So, once you've done your 'loan' spending, lock the card away and set up a direct debit to repay a fixed monthly amount so the loan's cleared within the 18 month period (use the loan calculator to work out how much you need to pay).

  • Spending length: 19 months 0%
  • Rep variable APR: 18.9% (Official APR Example)
  • Card issuer: Mastercard
  • Min income: £5,000/yr
  • Min repay : Greater of 1% of balance plus interest or £25
Halifax purchases card

Santander* - 18 months 0%Joint longest term purchase card - 18 months

The Santander* purchase card also gives you a decent year and a half interest free - plus, unlike with the Tesco card, you can check to see if you'll get this card before you apply.

If you're accepted for this card, you'll get the full 18 months, or you'll get rejected - so it's worth using the check for this card.

How to turn it into a loan: The big danger of using a card as a loan is that you choose your repayments, so there's a temptation to spend more later. Proper loans are fixed to clear the debt in a set time and you can't borrow more.

So, once you've done your 'loan' spending, lock the card away and set up a direct debit to repay a fixed monthly amount so the loan's cleared within the 18 month period (use the loan calculator to work out how much you need to pay).

The interest rate after the 0% is 18.9% representative APR so make sure you've cleared the card. If you can't pay off in time, shift the debt to a new balance transfer card.

  • Spending length: 18 months 0%
  • Rep variable APR: 18.9% (Official APR Example)
  • Card issuer: Mastercard
  • Min income: £7,500
  • Min repay : Greater of 1% of balance plus interest or £5
Halifax purchases card

Halifax - 17 months 0%But some may get 12 or 9 months 0%

This Halifax card is another long term option, and could be useful if you already have cards from Santander & Tesco above.

The promotional 17 months 0% will be given to "at least" 51% of those accepted. The rest will either get 12 or 9 months 0%. So only apply if you have a top credit rating, otherwise look at the other options here.

How to turn it into a loan: The big danger of using a card as a loan is that you choose your repayments, so there's a temptation to spend more later. Proper loans are fixed to clear the debt in a set time and you can't borrow more.

So, once you've done your 'loan' spending, lock the card away and set up a direct debit to repay a fixed monthly amount so the loan's cleared within the 17 month period (use the loan calculator to work out how much you need to pay).

The interest rate after the 0% is 16.9% representative APR so make sure you've cleared the card. Some people who get the card will get 21.9% or 25.9% APRs. If you can't pay off in time, shift the debt to a new balance transfer card.

  • Spending length: 17 months 0%
  • Rep variable APR: 16.9% (Official APR Example)
  • Card issuer: Mastercard
  • Min income: N/A
  • Min repay : Greater of 1% of balance plus interest or £5

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BEST BUYS: Turn a credit card into a loan

If you're after a card that does something other than money transfers, see the credit card guides page.

moneytransfer Some credit cards allow you to do money transfers, which shift cash straight into your bank account, so you owe that amount to the card instead. But the trick is to find a card that offers money transfers at a low interest rate. These cards are best for loans of less than £5,000 or so.

First and foremost, a huge warning. Never, ever withdraw cash and never try to spend on the credit card. Instead, just ask the card provider to...

"Do a money transfer to my current account."

The key to a money transfer is that you’re charged a special promotional interest rate. By asking this way, you'll get the cheap rate, and the cash will end up in your bank. For double surety, explain exactly what you think will happen, and get the card provider to confirm it.

Also, it's crucial you set up a direct debit to make AT LEAST the minimum repayment each month. If not, you’ll lose the special deal and pay the 15%+ APR on all debts. Though it's preferable to pay more than the minimum, so the debt is cleared by the end of the intro deal.

Like any credit card, you'll need to pass a credit check to be accepted. This also determines the credit limit you'll get too, so there's a chance you won't be given the amount you need. If you're concerned about this, reconsider a standard cheap loan.

Top 'money transfer' credit cards

WARNING! ONLY use the cards we specify below to do this. Money transfers are niche and very rarely available. Use the wrong card and the cost can be massive.

Time-limited 0% deals

MBNA

MBNA Platinum* 31 months 0% with 4% fee

The MBNA Platinum* card (you can use our eligibility checker for this card) is the longest card on the market for money transfers.

You need to do the money transfer within 60 days of opening the account, or you won't get the promotional deal. After the 31 month 0% deal ends, the rate is a huge 22.9% representative APR, so ensure you've repaid the money by then.

Always pay at least the minimum monthly repayment, or you'll lose the 0% deals.

  • 0% money transfer length & fee: 31 months 0%, 4% fee
  • Rep variable APR: 22.9% (Official APR Example)
  • Card issuer: Visa
  • Min repayment: Greater of 1% of balance plus interest, or £25
  • Any restrictions? Must transfer within 60 days
  • Min income: N/A
Leeds

Leeds Building Society* 30 months 0% with 4% fee

Leeds Building Society* is new to the credit card market, and it's come in with a whopping 30-month 0% money transfer deal, one of the longest periods on the market.

You must do a money transfer within 90 days of opening the account to get this offer. After the 30-month 0% deal ends, the interest charged on the money transferred is a big 22.9% a year, so make sure you've repaid the money by then.

Leeds says it may offer shorter 0% periods to people with poorer credit scores. You can do a 'soft search' on its website before you apply, which will tell you what deal you're likely to get. Other lenders can't see a soft search, so it won't hit your credit rating.

Always pay at least the minimum monthly repayment, or you'll lose the 0% deals.

  • 0% money transfer length & fee: 30 months 0%, 4% fee
  • Rep variable APR: 22.9% (Official APR Example)
  • Card issuer: Visa
  • Min repayment: Greater of 1% of balance plus interest, or £25
  • Any restrictions? Must transfer within 90 days
  • Min income: N/A
MBNA

Virgin Money* 29 months 0% with 4% fee

The Virgin Money* credit card (you can use our eligibility checker for this card) is another decent option for money transfers, though it's 0% period is shorter than the MBNA card.

After the 29 months at 0%, the rate leaps to 20.9% representative APR. It's crucial you make sure the balance is all paid off, or switched to a top balance transfer card, otherwise interest will rocket and you'll have lost all the 'cheap loan' goodness.

Always pay at least the minimum monthly repayment, or you'll lose the 0% deals.

  • 0% money transfer length & fee: 29 months 0%, 4% fee
  • Rep variable APR: 20.9% (Official APR Example)
  • Card issuer: Mastercard
  • Min repayment: Greater of 1% of balance plus interest, or £25
  • Any restrictions? Must transfer within 60 days
  • Min income: N/A

The 'What's the interest rate?' calculator

To see the cost of borrowing a lump sum on a credit card, pop your numbers into the calculator and it'll reveal the total interest and fees you'll pay, plus the equivalent of this as an APR. Then compare it to the best personal loan you could get.

Remember, if you borrow more after the initial lump sum, this will change the calculation entirely. Always work out a structured repayment plan to make this as cost-effective as possible - see below for the full technique.

What's the equivalent interest rate?

Compare true cost of borrowing a lump sum on a credit card

£
 
£
 
OR
 
months
Enter the details...
%
 
OR
 
%
 
 months
 
%
IMPORTANT: Only a rough estimate - please use only as an indication. Always do your own thorough checks before making any decisions.

Pay off the card like a loan

The final difference between a loan and a credit card is loans have structured repayments. The amount you pay back each month is fixed, so you’ll clear the debt in a set time. So to truly replicate the enforced discipline of a loan, you need to repay a fixed amount each month.

Simply pay the same amount you would’ve done if you’d got a standard loan, though as the interest is lower you’ll actually clear it more quickly. If you don’t know how much to pay, just get a quote from any lender.

You also have the advantage of flexibility


The magic of this particular solution is you now have the flexibility of a credit card for your debts. Therefore you could…

  • Pay off less a month than a loan would cost.
    This may sound good, but means you'll take far longer to clear the debt and pay much more interest. If you do this, keep it as short term as possible. Though if you're focussing on repaying other more expensive debts, it's a good thing.

    You'll always need to pay at least the card's minimum repayment, usually 2% to 3% of your outstanding balance, so you could have to pay a little more in the first few months. Ideally though, you should pay more - see Danger: Minimum Repayments.
  • Pay it off more quickly.
    The opportunity to overpay a loan without penalty is great. It means you can throw more cash at the debt to get rid of it quicker while paying less interest.

Think before adding the 'insurance'


Payment protection insurance is commonly sold with credit cards - the idea is it'll make some payments for you, usually for a year, if you are unable to (eg, if you lose your job).

But in many cases, it has been mis-sold. Many borrowers didn't realise they were signing up for it, or it was totally unsuitable for them. Some big lenders have been fined.

The protection isn't always bad, though policies sold with cards are often overpriced (you pay a monthly amount depending on the size of your balance). If you want it, compare the lender's cover with standalone providers such as Paymentcare or Best Insurance.

Always be vigilant to check you aren't getting more than you bargained for when you fill in the application, then check your statement each month to check you aren't inadvertently paying for extras if you didn't ask for them.

Never spend on a 'plastic loan' card


Avoid adding further spending to your long term debt card usually isn't a good idea. You have a limited time to pay off, and additional debt will throw out your repayment budget.

If you've done a money transfer, don't spend at all on that card, as you'll end up paying 18 or 19% interest on your purchases. The lender will put any repayments towards the most expensive debts first, which is good, but it'll take even longer for you to totally pay off the card. If you need a card for spending, see Top 0% Cards.

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