Loans Versus Credit Cards

Personal loans let you borrow up to £25,000; the key sell being you get “structured repayments” so you know how long you’re borrowing for and what it’ll cost each month. Yet in general, borrowing on the cheapest credit cards substantially undercuts the cheapest loans; meaning in many circumstances they should be used first.

Are you trying to make existing credit card debts cheaper?
In most cases a loan won’t be cheapest for you. Credit card balance transfer deals are designed to allow you to shift other cards' debts to them at a special cheap rate, usually much cheaper than the best loan rates.
This doesn’t mean you need to keep shifting debts between short term 0% deals; some cheap deals last until ALL the debt is repaid (see Best Balance Transfers). Though do ensure you make at least similar repayments to what the loan would cost each month.

Do you want to borrow for under a year or less than £1,000?
Loans over short time periods or low amounts are almost always expensive. Instead there are a variety of techniques possible that cut the cost. Many credit cards allow new customers to spend on them at 0% for up to the first year. Providing you can make the purchase on a card, and will definitely pay it off before the 0% deal ends, that's the best option (read Short Term Interest Free Loans for full details).

Need to borrow for a specific purchase / a lump sum.
Here loans are difficult to beat, not because they’re particularly cheap, but as it’s difficult to do any other way. However if you’re money savvy, there’s a way to replicate the facilities of a loan using a credit card, cutting the interest rate to around 5%. Read Cut Price Plastic Loans.

Looking to try and cut the cost of an existing loan?
Don't automatically assume that switching to a cheaper interest rate will save you money. Many loans, especially older ones, have lock in penalties which mean even though you'll pay less interest, when you add in the fine for moving overall you pay more.