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Ways to borrow

Everyone needs to borrow money from time to time. That could be to buy a car or go on holiday. So, it’s important to know the different ways you can borrow.

Your options for borrowing money

  General information

An overdraft is a simple way to borrow money for a short period. For example, until you get paid. It can be a good short-term solution, but if your overdraft usage creeps up every month you might need to look at your budgeting.

Some overdrafts can be interest free, but many lenders charge interest for using them. If you think you need an overdraft, try to agree it with your bank first. Other lenders can see if you go over your agreed limit, which might make borrowing harder in future.

Learn more about Overdrafts

Credit Cards

Credit cards are a flexible way to borrow money. TSB will give you a set credit limit that you can use however you like. Each month, you can choose to how much to pay off. You could repay the full balance or choose to just pay off a part of it. Most credit cards have an interest free period on purchases.

If you can pay off the balance in full during that time, you won't pay any interest. If you have a high-interest credit card, then you could transfer it to a credit card with a lower interest rate. Just watch out for any balance transfer fees. If you only make the minimum payment each month, it can be an expensive way to borrow as it’ll cost you more and will take longer to clear your debt.

Learn more about Credit Cards


Personal loans are a way to borrow money for an agreed amount of time. It can be used for anything from buying a new car to combining existing debts. You could use a loan to combine several credit cards into a single monthly payment.

Personal loans have fixed monthly payments that you can budget for. They often have lower interest rates than credit cards or overdrafts, which could mean paying less in fees. For large amounts, loans can be a more affordable long-term option.

Learn more about Loans

Things to think about when you borrow money

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Plan ahead

Work out how much you need to borrow and how long you'll be paying it back to get an idea of how much it’ll cost you each month.

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Look at your costs

Work out how much you’ll repay over the whole loan – if you can, making overpayments could reduce the total amount you pay.

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Don’t miss payments

Missing a payment could poorly affect your credit rating. A Direct Debit makes sure your payments are made on time each month.


A helping hand, if you need it

We've partnered with StepChange, the UK's leading debt charity. Every year, they help thousands of people deal with debt, and money challenges.

They offer free, impartial advice to help in your time of need.

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The APR includes the interest rate plus any annual or set-up fees associated with the money you've borrowed, giving you the total annual charge you'll have to pay for your credit. It doesn't include additional charges such as fees for early or late repayment.

APRs vary very widely - from single figures of 2-5% for mortgages, to 25% or more for some credit cards and store cards. Short-term "payday loans" often carry APRs of 300% or more.

When you're thinking about how much you can afford to pay back every month, don't stretch yourself too thin. Factor in unexpected or one-off expenses that might crop up, such as your car MOT or your boiler breaking down, and remember you need money for non-essentials too.

When thinking how much you can afford to repay, don't just be swayed by the lowest monthly payments: look at the amount you'll have to repay in total and over how long.

The longer you borrow the money for, the more interest you'll pay. If two loans have the same APR but one is over three years and one over five years, the five-year loan is likely to end up costing you more even if the monthly repayments are lower.

If you don't keep up your repayments on money you've borrowed, it can affect your credit rating. This could make it difficult to borrow money in the future, even if you're financially secure at the time. Being financially linked with someone with a bad credit rating can affect your rating too.

Different lenders use credit ratings in different ways, so it's worth trying another lender if you're turned down by the first - but be aware that too many credit checks in a short period of time can also have a negative effect on your score.

Please be aware your request for credit will be registered on your credit file. The final decision (accept/decline) on your application for credit is not recorded with credit reference agencies. Please be advised too many credit checks in a short period of time may have a negative impact on your credit score and could reduce the chances of you being accepted by a different lender.

If any of the information about you is incorrect, you can ask the agency to change it. Credit Reference Agencies don't decide if you can borrow money: their customers are the lenders, so they want information that's as accurate as possible.

For more information on how credit ratings work, read our guide to managing your credit score.