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How we could help

Learn about ways
to borrow money

Overdraft, loan or credit card?

We know it’s not always easy to decide whether a loan, credit card or overdraft is best for you, so we’ve explained each option below to allow you to compare and contrast.

Loans

A personal loan will allow you to borrow a fixed amount over a fixed period of time. 

How this option could help you

  • You’ll know how long it will take to repay your loan and how much you need to pay back each month
  • An option if you're looking to consolidate debt or fund a one-off large purchase or project
  • Suitable for medium and longer term borrowing needs

Things to remember

  • You can normally choose to pay your loan off early, but remember there may be an early repayment charge
  • You might have to pay a fee if you're late with monthly repayments. This would result in you having to pay back even more
  • If you're unable to meet your repayments on time it could have a negative impact on your credit score

Credit cards

A credit card lets you buy things up to an agreed limit and pay for them later. 

How this option could help you

  • You could use it to make different purchases and pay for them later, either in one go or in chunks
  • Could be used to consolidate other credit or store card balances
  • It could spread the cost of a big purchase
  • If you use your card responsibly it could have a positive impact on your credit score

Things to remember

  • You will be charged interest on any outstanding balance. So if you only pay back the minimum monthly payments, it's an expensive way to borrow. You should try and repay your balance in full, or as much as you can each month
  • You might have to pay a fee if you're late with monthly repayments. This would result in you having to pay back even more
  • If you struggle to meet the monthly repayments on time it could have a negative impact on your credit score

Overdrafts

An arranged overdraft allows you to spend a bit more money than you hold in your current account, up to an agreed limit. 

How this option could help you

  • Could be suitable if you need to cover a short term expense
  • Useful for covering unexpected bills or as a short-term safety net before your next payday
  • Could be useful if your income or outgoings vary from month to month

Things to remember

  • You will be charged interest on the amount of arranged overdraft you use. The interest is normally incurred daily and charged to your current account on a monthly basis
  • If you go over your arranged limit, you’ll be charged interest. This could result in payments being rejected, and additional charges
  • The interest rate for overdrafts may be higher than the interest rates for personal loans and credit cards

Need a wee bit more help?

If you've not quite made up your mind, pop over and use our borrowing needs tool. It could help you discover if a loan, overdraft or credit card is best for you.

Something else we can help you with?