End of mega cheap personal loans and 0% credit cards – what are the best options for borrowing?
The length of time on zero per cent balance transfer credit card deals has dropped from 43 months to 38 months since the beginning of the year
BORROWING money with mega low interest rates and zero per cent credit card balance transfer deals "may be coming to an end".
Finance expert, Andrew Hagger from Moneycomms has said that it's getting harder for people to borrow money at a lower cost as banks increase their rates.
Since the Bank of England raised the base rate to 0.5 per cent from 0.25 per cent in November, banks have been following the guidelines and putting their own rates up for borrowers.
According to the analyst, there are now fewer loans of more than £10,000 with super low interest rates of below three per cent available on the market.
Meanwhile, the length of zero per cent your credit card transfer deals has also shortened.
Most credit card lenders will allow you to transfer your credit card debt to another card to save you paying high interest rates you may have racked up.
What are the best options for borrowers?
YOU can still get a decent deal on some zero per cent credit cards and personal loans, but experts warn they are likely to only get worse next year. Here's where you can get the best deals:
Credit cards with 0% on balance transfers
- Barclaycard Platinum 38 Month Balance Transfer Visa, 1.4 per cent balance transfer fee
- Tesco Bank Clubcard Credit Card for Balance Transfers Mastercard, 38 months, 2.69 per cent balance transfer fee
- nuba Transfer Credit Card Mastercard, 38 months, 3.49 per cent balance transfer fee
Credit cards with 0% purchase rates
- Sainsbury's Bank Purchase Credit Card Mastercard, 31 months
- Halifax Online 30 Month Purchase Credit Card Mastercard, 30 months
- Sainsbury's Bank Dual Offer Credit Card Mastercard, 30 months
Unsecured £7.5k personal loan paid over five years
- John Lewis Financial Services, 2.9 per cent APR, monthly repayment £134.31
- AA, 3 per cent APR, monthly repayment £134.63
- Cahoot, 3 per cent APR, monthly repayment £134.63
Supplied by Moneyfacts.co.uk and accurate as of December 6 2017.
A zero per cent balance transfer credit card will charge you a transfer fee but won't charge you interest on the sum of money you move for an agreed amount of time, usually over years.
But since the beginning of the year, some of the best deals on offer has dropped this free interest rate time period from 43 months at the beginning of the year to 38 months now.
"Basically there has been a bit of a price war between lenders for personal loans over the last few years gradually driving down rates," Andrew told the Sun Online, "with the most competition and lowest rates on offer for loans of £10,000 plus.
"However in the last month a number of best buy products have seen their rates increase - so the ultra low cost era may be coming to an end."
And with another possible base rate rise on the horizon for 2018, professionals are warning those looking for a great deal "will need to act fast".
A spokesperson from Moneyfacts said: "With extra scrutiny surrounding unsecured lending it is little surprise we have seen lenders tightening up this area.
"Unfortunately, the only way from low rates is up so anyone considering a loan should perhaps think about taking one out sooner rather than later."
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Whilst a rise in the base rate is good news for savers, it's bad news for borrowers who will not have to pay high rates of interest.
Last month a Bank of England chief called on savers to boycott the penny-pinching banks that have failed to pass on this month's rise in interest rates.
The senior official urged the public to shop around if they are missing out on a good deal after the Bank's base rate increased by 0.25 per cent three weeks ago.
How to find the best credit card or personal loan?
IF you do want to apply for credit, here's how to find the best product for you.
- Check out the key information before applying. This should include the interest free period, interest rate and other charges.
- Use a comparison website like MoneySuperMarket.com or GoCompare.com
- Check you are eligible. If you don't fit the requirements then you could be rejected and this will have a knock-on effect on your credit score.
- Check your credit score before applying. You can do this for free by signing up to a 30 day free offer but you'll need to cancel before the end of the time period, or you'll pay a fee.
- Only those with the best credit scores get the advertised rate, so it's worth building up your history by never missing a payment.
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