Overdrafts, buy now pay later, credit cards and personal loans compared by what they really cost. Learn how APR works and how to borrow without getting stuck.
Borrowing isn't good or bad by itself. It's spending future money today — and future-you pays it back, usually with extra.
APR helps you compare. Total amount repayable tells you what it actually costs. Always check both.
Compare options on total cost and risk — not on how fast the money arrives.
An interest-free student overdraft is a safety net, not spending money. Have a plan to clear it before the interest-free period ends after graduation.
Arranged overdraft = agreed in advance. Unarranged = going past your limit (payments may just be declined). Overdraft interest rates can be high, so use them short-term.
BNPL is credit. It's now FCA-regulated (affordability checks, Ombudsman access), but late fees, stacking plans and credit-file impact are still real.
Credit card golden rule: pay the full statement balance every month. Avoid cash withdrawals — they're usually charged a fee and interest from day one.
Personal loan: fixed repayments over a fixed term. HP: you own the car at the end. PCP: lower monthly payments, but a large final payment if you want to keep it.
Payday loan caps: 0.8% a day, £15 max default fee, total cost never more than 100% of the amount borrowed. Capped — but still very expensive.
Friend/family loans: agree amount, dates and what happens if things go wrong — in writing. Credit unions: not-for-profit lenders owned by members, with legally capped interest.
Loan sharks: no paperwork, take ID or bank cards, add random charges, use threats. It's illegal. Free, confidential help exists — you won't be in trouble.
Minimum payments keep you out of arrears but keep you in debt for years. Paying more than the minimum cuts the total cost massively.
Free with a code
GameBorrowing: quick answers
Nana's rule of thumb: what's the FIRST question before borrowing anything?
Can I afford the repayments AND still cover essentials?. Yes. If repayments would squeeze rent, food or bills, the loan is a problem in disguise.
Borrowing: in-depth guides
Related topics
- Credit Scores & FilesThe invisible report card banks read.
- Good Debt vs Bad DebtStudent loans, mortgages, business loans vs BNPL: what debt really costs.
- Debt & Getting HelpPriority debts, and who to call (for free).
Browse the whole money library or play the free money games.