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The Bank of England and policymakers are rightly worried UK personal borrowing is dangerously high. Yet fierce market competition continues to drive rates lower, and latest cuts mean today's cheapest loans undercut anything previous - they're now half the pre-credit-crunch cheapest.
This isn't likely to last too long though, as there's talk of policy intervention to push prices higher to cool demand. So in a couple of years we may look back to find this is the all-time sweet spot for cheap borrowing. For those who want to take advantage, here are my 10 must-knows... | 1. | Debt's like fire, use it right and it's a powerful tool; get it wrong and it burns. Always be tough on yourself and be critical about whether you really need to borrow - if not, wait and save instead. The worst thing to borrow for is just to willy-nilly fill gaps in your lifestyle. That risks a debt spiral.
Borrowing is best for planned, needed purchases, eg, the fridge/freezer must be replaced or to pay annual car insurance, as it's cheaper than monthly. If you are going to borrow, minimise the amount, repay as quickly as possible, and ensure repayments are comfortably affordable. If not, don't do it. | | 2. | Super-low rates mean rejections are common - ALWAYS use a loans eligibility calculator to see who'll say yes. The only way to know if you'll be accepted is to apply, yet that marks your credit file, and too many marks hurt your creditworthiness. So first use our Loans Eligibility Calculator which matches you with the cheap lenders most likely to accept you.
Amy used it: "Using your guide and eligibility calculator I've been accepted at a rate of 3.1% meaning I've slashed the interest of my loan from a whopping £7,700 to around £750."
It's also worth (especially if you're rejected) checking your free credit report & score via the MSE Credit Club, which details what's wrong and how to fix it. | | 3. | LOAN BEST BUYS from 2.8%. The rate you pay depends on how much you're borrowing. Many rates - especially for larger amounts - are at all-time lows.
Unless stated, the rates are for 1-5-year borrowing - note that repaying quicker is cheaper as less interest accrues. Always ensure you pay on time or you may get a charge & a credit black-mark.
- £1k-£1,999: Zopa's* 9.5%-9.9% rep APR, Hitachi* (2-5 yrs) 12.7% rep APR.
- £2k-£2,999: Zopa's* 6.9%-7.9% rep APR, Ikano* 7.9% rep APR.
- £3k-£4,999: Zopa's* 5%-6.9% rep APR, Ikano* 5.2% rep APR.
- New. £5k-£7,499: Hitachi* (2-5 yrs) is 3.4% rep APR, TSB* 3.5% rep APR.
- New. £7.5k-£15k: M&S Bank* (1-7 yrs) & TSB* are 2.8% rep APR. | | 4. | Sometimes, bizarrely, borrowing more is cheaper. A peculiar quirk means you can sometimes pay less by getting a bigger loan. This is due to the fact rates decrease at set thresholds (as you can see above). Let's use an extreme example...
If you wanted to borrow £4,900 over 5yrs, the cheapest loan's 5.2%, meaning a total repayment of £5,575. Yet borrow £5,000 and the rate drops to 3.4%, which means total repayments are £5,444 - that's £231 LESS interest.
So if you're borrowing a couple of hundred pounds or so less than a threshold (so £2,000, £3,000, £5,000 or £7,500) use a loan cost calc to see if you'd be better off borrowing more (assuming you're accepted for the cheapest loans). | | 5. | Borrowing under £3,000? Check 0% credit-card loans instead. Loans always charge interest, but credit cards can be 0%. So if you can get one and use it right, it's cheaper. And as card credit limits for most people are £3,000 or less, this is mainly for smaller amounts. There are two routes...
- If your loan is for something you can pay for on a credit card: Pay for it on a top 0% spending card and it's at no cost whatsoever.
- If you need your loan in cash: A few 0% credit cards have a special feature called a money transfer. This lets you pay money directly into your bank account, so you can use it as a loan and owe the card at 0% instead. To find which you're most likely to get, use our 0% Money Transfer Eligibility Calc.
The top money transfer deal is 41 mths 0% from Virgin Money (eligibility calc incl pre-approval / apply*) but there's a one-off fee of 3.8% of the amount transferred. If you can repay quicker, a 36mth 0% Virgin Money card (eli gibility calc incl pre-approval / apply*) has a lower 2.9% fee. Both are far cheaper than a standard loan, but if you're new to this, be careful - read our full Money Transfers guide first.
Whichever card you get, make sure you follow our golden rules...
a) Never miss a min monthly repayment or you could lose the 0% deal.
b) Always clear the card or do a balance transfer before the 0% ends, or rates jump after to 20.9% rep APR with the Virgin cards (see APR Examples).
c) Don't withdraw cash - it's rarely at the cheap rate.
d) While credit cards allow flexible repayments, to replicate a loan, set up a direct debit to fix repayments so you clear it before the 0% ends. | | 6. | Beware: a 2.8% APR doesn't always cost 2.8% - it can be a lot more. All personal loans are 'representative APR', sadly meaning only 51% of those accepted need to get the advertised rate. The rest can be charged more (with no limit on how much).
Unfortunately there's usually no way to know the exact rate before applying. Though anecdotally, the higher your loan eligibility score for a lender, the more likely you are to get the advertised rate. | | 7. | Already got a loan? Rates are so low you may be able to save £100s. Rates have fallen so much it's worth c hecking if you can get a new loan to repay your existing one and slash the cost.
Becki emailed: "Big thank you. I took out a loan at a terrible rate - £7,500 interest on £15,000. I applied for a cheaper loan after your email. Interest around £1,000 - I used it to pay off the previous one, saving £6,500."
However, as there can be early exit penalties of a couple of months' interest, to check you'll save is more than just getting a cheaper APR...
- Step 1: Ask your current lender for a settlement figure. This is how much it'll cost to repay your loan in full (ie, the amount you'd need a new loan for).
- Step 2: Check remaining repayments with current lender. Find out what your monthly repayments are and how many you have left. Then multiply the two to see how much it costs to just keep repaying.
- Step 3: Find the cheapest new loan for the settlement figure. Use our free Loans Eligibility Calc to show the likely cheapest deal you can get.
- Step 4: Find out which is cheaper. Use our Loan Switching Calculator to see if it's cheaper to get a new loan or keep paying the current one. | | 8. | Got a Nationwide current account? A trick to beat the cheapest loans. If you've got (or get) a Nationwide current account, it promises that if you're accepted for a loan elsewhere, it'll beat it by 0.5 percentage points. But it excludes peer-to-peer lenders (so Zopa is out). This means a 2.8% loan becomes 2.3%. | | 9. | Getting a loan to repay credit cards? That's not usually the cheapest way. Many with lots of debts look to 'consolidate'. Yet all that means is having all your debts in one place. While it can reduce what you pay each month, as it takes longer to repay, it'll cost you more in total. If possible, instead focus on cutting the rate, as that's what dictates real costs.
If you've credit card debt you want to shift to a loan, instead look for a top 0% balance transfer, where a new card repays debts on old card(s) for you, which usually easily undercuts the cheapest loans. | | 10. | If you're borrowing for a car - a loan is just one option. Car finance is complicated, and there's so much choice there's no easy answer - it depends on your priorities and the car. Just getting the cheapest loan is a simple option, you own the car and you have to repay the loan. Yet our full Car Finance section has guides on the other options...
- PCP deals - Roughly a loan to part-pay for the car, then after a set time you can decide whether to give it back or pay the remainder.
- Leasing - A long-term rental & servicing agreement. You don't own the car.
- Hire purchase - You hire it over the long term with an option to buy. |
PS: Can't sleep because of debt? My aim above is to cut the cost of borrowing. Yet if you're panicking because of debt or struggling to even make minimum repayments, it's likely time to draw a line under it all and get free help from a non-profit debt-counselling charity.
These include Citizens Advice, StepChange and National Debtline - they're there to help, not judge. The most common thing I hear after is "I finally slept last night". If you're really struggling with your debt emotionally, Christians Against Poverty can help too. More info in our Debt Crisis Help and Mental Health & Debt guides. |
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| | | | | | | | | | | | | | | | If flights are cancelled or delayed you've specific and powerful legal rights to £100s/person in compensation
Over 75,000 whose plans were ruined by British Airways' recent IT fail could be owed. And it's not just BA - if you've been delayed by ANY airline in the last SIX YEARS our Free Flight Delay/Cancellation Compensation Tool can help, as it did for Lee: "Raised the claim, and got £628 in my bank 4 days later - incredible. Thanks MSE and [complaints site] Resolver." As the BA story is fast moving, also see our regularly updated BA fail help guide. Here's brief info... Flight cancelled or delayed? EU reg 261/2004 means you're due up to £520/person. This applies to all EU flights (ie, all fromEU airports, or to an EU airport on an EU airline). So all BA trips count unless your flight took off and landed outside the EU. If your flight is cancelled you're always due a full refund or an alternative. But you may also be due compensation on top. Here are the rules...
- It must be the airline's fault, eg, strikes don't count; but BA's fail does. See what counts?
- For delays your flight must have arrived 3hrs+ late. Compensation depends on length. See what am I due?
- If cancelled, on top of a refund/new flight you may also be due £100s in compensation if the alternative flight offered arrives later than your original (even if you choose a refund instead). See what am I due?
- You can also claim for food, hotels etc if you were stuck at the airport.
- For old claims see how to check past delay lengths.
Can I claim extra if I lost out on hotel or car hire bookings, or booked another flight myself? Flight cancellations or delays can cause a large number of knock-on costs. EU rules don't account for this, just fixed compensation. Your best option is to check with your travel insurer, though some policies won't cover these unless you have abandonment cover - see Hotel, car hire help. If not you could look at suing BA for consequential loss, but lawyers tell us this is fraught with difficulties, so probably not one for a layperson alone. |
| | | | Shoe-ly not? £2 River Island, Asos, New Look etc women's shoes sale (+ deliv from £4). Ends Fri. Incl surplus stock from popular high street stores, but it can be a game to find big brands. £2 shoes from Everything5pounds. Plus separately, there's a rare 30% off Selfridges designer shoes till Sun.
Why throwing your pay & display ticket away after use could cost £100. See parking ticket warning.
Pay £1, get 25p off most Co sta, Pret & Starbucks drinks EVERY time. See 'don't be a mug' trick.
Ends 11.59pm TODAY (Wed). Shift debt to 32mths 0% for LESS than no fee. Accepted new M&S Bank cardholders (eligibility calc / apply*) via this link can balance-transfer existing debts to it for 32mths 0%, for a one-off fee of 0.99% (min £5) of the amount shifted. Yet apply by end of Wed, and if you move £100+ to it by Fri 30 Jun, you get £25 cashback. So for anyone shifting under £2,525 of debt, the cashback is bigger than the fee, so you're actually PAID. Always pay at least the monthly min and clear before the 0% ends or it's 18.9% rep APR. Full help and more options in Top Balance Transfer Cards (APR Examples).
Free Open Farm Sunday: 300+ farms incl pony rides, animal feeding & welly wanging. One day a year, they open their gates and put on activities - it's a baa-gain. We're telling you a week in advance as many said it came too late last year. See Sun 11 Jun for full info.
WED 4.30PM. THE MSE LEADERS' VIDEO & WRITTEN DEBATE GOES LIVE
Consumer & personal finance issues are rarely covered in the general election in detail. Yet all 7 main party leaders are due to supply a video and answers to your Qs on pensions, benefits, WASPI, mortgage prisoners, savings, affordable housing and more. Today at 4:30pm the MSE Leaders' Debate goes live. |
| | | | | | | | | | Plus offers comparison sites MISS - which can mean cheaper deals and freebies such as £50 Amaz on vch
Finally, a crackdown means home insurance annual renewals must now include what price you paid last year - making it easier to see how much your insurer's hoicking your premium. This should be a big spur to check if it's cheaper elsewhere - as it usually is. Heather emailed after using our system: "Got my home insurance down from £652 to £126. Fabulous, thanks." Full info in Cheap Home Insurance, here are the main building blocks... Step 1. Combine comparison sites to get 100s of quotes in minutes. They zip your details to dozens of insurers and brokers at once. Yet they don't all search the same firms and can even have different prices for the same insurer. So it's best to combine a couple to get a wider range. Our current order's Confused.com*, MoneySupermarket* then Gocompare* (see full order & why). Step 2. Check insurers NOT on comparison sites. Two big insurers, Direct Line* and Aviva*, won't appear on them. They're worth checking as they can be competitive for some. Step 3. The HOT deals price comparisons miss, eg, £50 Amazon vch. Some hot promo deals aren't on comparisons, plus we've blagged a few extra ones too (all below bar Co-op are blagged) - for all, you need to buy COMBINED buildings and contents insurance. You get the same price as going direct but with a freebie on top. So check their cost to you, and factor in the freebie to see if it wins.
- Ends Wed. Get a Together Mutual* policy via this link and you get a £50 Amazon voucher.
- Get a Co-op* policy via this link and get a £50 Co-op food voucher.
- Get a Leisure Guard* policy via this link and get a £35 Amazon vch. Vouchers normally take 3-4 mths to arrive. Full info in our promos not on comparisons list. How much you cover makes a big difference - don't overpay by overcovering.
- BUILDINGS cover (usually only needed by freeholders). Many overinsure by covering their home's market value. Instead the rebuild cost counts (ie, how much to rebuild if it were knocked down). Use a rebuild calc to check.
- CONTENTS insurance (everyone). Don't underinsure - if you cover £10k of possessions but have £20k, if you later try to claim for a £1,000 TV, you may only get £500. Use a contents calc to check you're properly covered. |
| | | | Pay £1 for £17 Cinema and Entertainment Now TV (Sky online) pass incl Game of Thrones & Finding Dory. MSE Blagged. 1-month streaming deal for newbies. Bargain box sets
50+ FREE festivals UK-wide, see Razorlight, Corinne Bailey Rae, The Darkness & more. It's the season so we've rounded up the top FREEBIES - most suitable for families. Free festivals
Sim-ply the best. 5GB (4G) data, 2,000 mins, 5,000 texts £10/mth. MSE Blagged. A cheap Sim-only deal from iD Mobile* (uses Three's network). For new and existing customers on a 30-day rolling contract - it's as good as we've seen at this usage level. Full info & more options in Sim top picks.
£1 sun cream - factors 15-50. Don't overpay, find how to get fa nTANstic protection for less. See sun cream tricks.
£30 free-range BBQ & roasting meat hamper (£58+ at supermarkets). MSE Blagged. All outdoor-reared UK meat. Incl lamb, pork, beef brisket, sausages & mince. Meat hamper |
| | | | They can get this email free every week |
| | | | | | | | The new Tax-Free Childcare system is dogged by technical troubles but don't let that put you off - it's big money
The new Tax-Free Childcare scheme's now a month old, and supposed to be a big boost to the coffers of parents paying for childcare. 10,000s have joined already, but the online Government-run account you operate it by is suffering repeated technical breakdowns, leaving parents unable to log in and in some cases causing delays in them receiving the payment. DavidB tweeted: "I've waited nearly 6 weeks to open an account. It's a shambles. Sort it out HMRC." Full info on the issues in Tax-Free Childcare Fail. So is it worth it? Yes. But should you always go for it? No, as some schemes are better...
First grab 15hrs' free childcare for 3 & 4-year-olds. Every parent in England is entitled to 15 hours/wk of free nursery provision. Plus, under current plans, from Sep, some (you need to fit eligibility criteria) will be able to get another 15hrs a week in England, though nurseries aren't happy, worried it'll hit their finances. See full info in 30hrs' free childcare - also incl info for rest of UK. Then if family income's sub-£46,000, check if you can get childcare tax credits (typically worth £3,000/yr). If you pay for childcare, work 16+hrs a week (couples must both work) and have a sub-£46,000 family income it's worth checking if you're entitled to these tax credits. Eligibility is complex, so we're not saying you will get them, just that it's worth checking. Full help in Childcare Tax Credits. If you can get 'em, they usually beat what's below. Then EITHER... 'Tax-Free Childcare' gives up to £2,000 free per child. For every 80p you put in a special new account to pay for childcare, the state will add 20p. You can put up to £8,000 a year per child in the account, so that gives you up to £2,000 added on top per child (up to £4,000 if your child is disabled).
To qualify, you need to be working and earning £120+/week (both must, if a couple) and no one parent can earn over £100,000. Currently you can sign up if you're paying for childcare for any child aged under 4 by 31 Aug 2017. Parents of older children will be able to sign up later in the year. Full help in our Tax-Free Childcare guide. ... OR pay for childcare with childcare vouchers, but sign up SOON. Anyone whose employer offers childcare vouchers can get them. Here you usually swap pre-tax salary for vouchers. Eg, a basic-rate taxpayer can swap £1,000 of salary, which is only £700ish in take-home pay, for £1,000 in childcare vouchers, saving £300. To get these you must sign up by April 2018, so decide now if they're for you. Full help in Childcare Vouchers. Which wins, Childcare Vouchers or Tax-Free Childcare? (You can't have both.) This is complex, yet worth investigating as each wins large for certain people. See our Childcare Vouchers vs Tax-Free Childcare infographic for easy help. |
| | | | Make money doing quick online surveys, polls, games and searches. MSE Blagged. MoneySavers love doing 'em, and we've an extra £10 reward for newbies. Swagbucks
SUCCESS OF THE WEEK: (Send us yours on this or any topic)
"I followed Martin's rule that no one should pay £10+/mth for a mobile. Rang EE to say I was leaving - it instantly knocked £180 a year off - thanks." See Mobile Phone Haggling for how to do it yourself. 100+ free or cheap things to do with the kids this half-term. Eg, £2.50 cinema tix, 10-book bundles for £10, free kids' crafts. See&nbs p;half-term treats. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thu 1 June - Good Morning Britain, ITV, Deals of the Week, 7.40am. View previous
Fri 2 June - This Morning, ITV, Martin's Quick Deals, time TBC. View previous
Mon 5 June - This Morning, ITV, time TBC
Mon 5 June - BBC Radio 5 Live, Lunch Money Martin, noon. Subscribe to podcast | | |
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| Wed 31 May - BBC Radio Cumbria, 'Money Talks', from 6pm
Thu 1 June - BBC Radio Tees, 10.35am
Fri 2 June - BBC South West stations, breakfast
Tue 6 June - BBC Radio Cambridgeshire, 2.20pm |
| | | | | | Q: My dad has dementia. Does my family have to arrange a Lasting Power of Attorney (LPA) for any decisions that may have to be made on his behalf when his condition worsens, or will my mum be able to make those for him? Susan, via email. MSE Sarah M's A: It's very important to get a property and financial LPA as, without it, your mum won't be able to access your dad's finances (unless they have joint bank accounts). You'll need a separate LPA for health and welfare decisions. Without this, your mum won't have any legal right to make important decisions about your dad's care and treatment - although she should always be consulted by professionals making those decisions, such as doctors or social workers. Crucially, both must be set up while your dad has 'mental capacity' - ie, the ability to make the decision for himself. So it's worth acting as soon as possible, or you'd need to apply through the Court of Protection to become a 'deputy' - a long, drawn-out and costly process. For full help and info, see our Power of Attorney guide. Please suggest a question of the week (we can't reply to individual emails). |
| | | | | | That's it for this week but before we go, last week saw the re-release of the Nokia 3310 - first out 17 years ago - but now brought back by the Finnish mobile giant. So does this prove retro devices and tech are still cool? Do you still use a VHS, LP turntable or cassette player? Or does the thought of going back in time give you the shivers without the internet and apps on the go? Let us know in our 'Nokia 3310 - is retro back?' Facebook discussion. We hope you save some money,
The MSE team |
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