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Cheap Credit Card Loans Get card '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.

Halifax purchases card

Halifax* - 20 months 0%But some may get 16 months 0%

The longest 0% spending card available is the Halifax* credit card, which is the longest 0% purchases card we've ever seen. But watch out as some may get 16 months.

The 20 months 0% will be given to "at least" 51% of those accepted. The rest will get 16 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 20 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. 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: 20 months 0%
  • Rep variable APR: 18.9% (Official APR Example)
  • Card issuer: Mastercard
  • Min income: N/A
  • Min repay: Greater of 1% of balance plus interest or £5
BOS

M&S Bank* - 19 months 0%Free £30 voucher and earn reward points on spending.

The M&S* card gives 19 months 0% on on spending. Plus if you're an M&S shopper, this card will also give you M&S points on your spending. If you apply through the link above before 30 Nov, you'll also get a £30 voucher to spend in M&S stores.

Apply for the card before 10pm on Sunday 30 November, through the link above, and spend on it by 31 December, and you'll receive a £30 voucher to spend in M&S stores or online (not on M&S food). The voucher will be emailed to you by 24 January, and you must use it by 28 February.

How to turn it into a loan: The big danger of using a credit card as a loan is that there are no set repayments, and you choose when and how much you want to repay, 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, make sure you lock the card away and set up a direct debit to repay a fixed monthly amount so the loan's cleared within the 19 month period (use the loan calculator to work out how much you need to pay).

Make sure you fully clear the card by the end of the 19 months or you'll be charged interest at 18.9% representative APR on any remaining balance.

  • Spending length: 19 months 0%
  • Rep variable APR: 18.9% (Official APR Example)
  • Card issuer: Mastercard
  • Min income: n/a
  • Min repay: Greater of 1% of balance plus interest or £5
tesco

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

Next longest is Tesco's* 19-month Clubcard Credit Card, which gives all customers who apply the full 19 months if they're accepted.

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 19 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
BOS

Bank of Scotland* - 19 months 0%Though some will get 16 months

The Bank of Scotland* card gives 19 months 0% on purchases. Some poorer credit scorers could get 16 months 0% - but this isn't too bad a deal either.

How to turn it into a loan: The big danger of using a credit card as a loan is that there are no set repayments, and you choose when and how much you want to repay, 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, make sure you lock the card away and set up a direct debit to repay a fixed monthly amount so the loan's cleared within the 19 month period (use the loan calculator to work out how much you need to pay).

If you're on the 19 month deal, the interest rate after is 18.9% representative APR. But if you're given 16 months, it'll be either 21.9% or 25.9%, so make sure you've paid it off, or you're ready to shift the debt to a new balance transfer card.

  • Spending length: 19 months 0%
  • Rep variable APR: 18.9% (Official APR Example)
  • Card issuer: Mastercard
  • Min income: n/a
  • Min repay: Greater of 1% of balance plus interest or £5
BOS

Clydesdale/Yorkshire* - 19 months 0%Full 19 months on purchases if accepted

The Clydesdale*/Yorkshire* Gold credit card offers 19 months 0% on spending. If you're accepted, you'll definately get the full 19 months.

How to turn it into a loan: The big danger of using a credit card as a loan is that there are no set repayments, and you choose when and how much you want to repay, 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, make sure you 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: 19 months 0%
  • Rep variable APR: 18.9% (Official APR Example)
  • Card issuer: Mastercard
  • Min income: n/a
  • Min repay: Greater of 1% of balance plus interest or £5
Halifax purchases card

Santander* - 18 months 0%Decent fee free 0% card option

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

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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* 24 months 0% with 2.69% fee

The MBNA* platinum money transfer card has been revamped, and is now offering 24 months 0% for the lowest ever fee of 2.69% on money transfers. You can check if you'll get the card by using our eligibility calculator.

You need to do the money transfer within 60 days of opening the account, or you won't get the promotional deal. After the 24 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: 24 months 0%, 2.69% fee
  • Rep variable APR on money transfer: 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
Virgin 26 month credit card

Fluid* 29 months 0% with 4% fee

The Fluid* credit card offers 0% for 29 months on money transfers for a one-off fee of 4%.

Though you get five months more, than the MBNA card above, the fee's nearly double. But don't let this put you off, becuase if you know you'll need the extra few months to repay the card, then this Fluid card is your best bet, as it's always better to pay a higher fee, than interest at 22.9%.

You can do the money transfer at any time within 60 days of opening the account. After the 28 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 repayments or you'll lose the 0% deals. And never spend on the card, as it's not at 0%.

  • 0% money transfer length & fee: 29 months 0%, 4% fee (first 60 days, 5% fee after)
  • 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

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

£
 
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OR
 
months
Enter the details...
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OR
 
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 months
 
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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.

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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