Martin Lewis explains how to borrow money without paying interest
Martin Lewis revealed a number of ways people can borrow at 0% interest.
The founder of Money Saving Expert (MSE) said borrowing is “cheap right now”, although he warned people not to take out a loan unless it is absolutely necessary.
He continued, “Make sure this is a planned purchase, with budgeted and affordable repayments. Borrow the minimum you need and repay as fast as you can. If in doubtâ¦ don’t! “
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According to the latest MSE newsletter, the key to borrowing is “of course, getting the lowest rate possible”.
By doing this, more of your repayments erase actual debt, rather than covering interest.
Getting a 0% credit card with 22 months interest free and Â£ 25 cash back was one of the tips Martin gave.
Here are some of the ways you can borrow without paying – or paying very little interest:
0% credit card
These are best used for borrowing from Â£ 100 to Â£ 5,000.
Done well, these offer loans at very low prices, at no cost for almost two years.
To use this route, you will need to be able to repay what you have to borrow on the card.
You can also check your eligibility without having to apply.
The downsides are that it’s easy to spend and borrow too much, repayments aren’t fixed, and not everyone can get one.
The current first choice is the M&S Bank at 0% for 22 months, which gives accepted newbies the full 22 months, and if you spend Â£ 100 + in the first 90 days (probably if you use it to borrow), you get Â£ 25 cash back on top of the usual reward points.
The 0% is only for spending on the card, not for withdrawing money, so avoid that.
The cheapest loans ever
These are best used for borrowing Â£ 3,000 to Â£ 25,000. This is your preferred route for larger loans.
While a card can be useful for replacing a broken refrigerator, a loan is a better option if, for example, you need to replace an entire kitchen.
Sadly, there’s no way to do it at 0%, so think carefully before you jump in – although rates are historically low right now.
The best current offers (all are representative APRs):
Â£ 1,000 – Â£ 3,000: Hitachi 9.8%
Â£ 3,000 – Â£ 4,999: Hitachi 8.1%, AA, post office, MBNA 8.3%
Â£ 5,000 – Â£ 7,499: Sainsbury’s (for Nectar holders) 3.3%, AA 3.4%
Â£ 7,500 – Â£ 15,000: Cahoot * and Santander 2.8% + if they let you CLAIM a Â£ 50 Amazon voucher (considering a Â£ 10,000 loan over 3 years this is the equivalent 2.5%)
Â£ 15,001 to Â£ 20,000: Cahoot 2.8% + CLAIM Â£ 50 Amazon voucher and MBNA, TSB, Tesco 2.8%
Â£ 20,001 to Â£ 25,000: MBNA, TSB, Tesco 2.8%
Overdrafts can come with astronomical interest rates, but currently there are two bank accounts that pay switches over Â£ 100 and offer 0% overdrafts.
So you can use the change incentive to reduce debt and the rest is free.
It’s hard to get it right, but if you can, it’s unbeatable for small loans.
The best offers of the moment:
First Direct free Â£ 130 plus Â£ 250 overdraft at 0% *
Until November 22, switchers receive Â£ 130, and many enjoy a permanent interest-free overdraft of Â£ 250 (40% EAR above).
If your borrowing is less than Â£ 350 then this is a good deal as the Â£ 130 will pay off some of the debt and the rest is interest free.
Nationwide FlexDirect Free Â£ 100+ & 1 year 0% overdraft.
Switchers get at least Â£ 100 and often 0% overdraft per year. The overdraft amount depends on a credit score, but for some it may be higher than that of First Direct, although it is worth using your own eligibility tool to get an indication before applying.
After a year it’s 40% EAR, so make sure the debt is paid off by then.
For more tips on borrowing at 0% interest, visit MoneySavingExpert.com
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