What would you do if you needed to buy a new car or make home improvements but you didn’t have the money in savings? If you are planning a purchase of a few thousand pounds and you don’t have the cash up front, your overdraft probably won’t cut it.

The most obvious way to borrow a big sum for a few years is to take out a personal loan.

Personal Loans - Simple and straightforward

A personal loan can be a great option if you need money relatively quickly and without fuss. They are available from a huge range of sources, via price comparison sties, from banks and building societies to supermarkets and the Post Office. You can apply in branch, over the phone and online… and sometimes get an immediate decision and the funds within days.

Plus you decide how much you want to borrow and choose your repayment term - they are easy to understand and to arrange.

For example, current best buy loans start from 7.9%, available from Alliance & Leicester, Nationwide and Sainsbury’s Bank.

But there is another option. Have you considered a credit card?

Your flexible friend

A new breed of credit card is on the market that can rival personal loans and offer you a low rate of interest over the long term. The long-term, low rate credit card could be the best solution if you want to borrow a substantial sum.

It works by giving you an agreed long-term rate of interest on a balance you transfer - simple as that.

It doesn’t last for six months or a year, but is ongoing, giving you time to repay your debt.

You make the purchase - a new bathroom for example - on your existing credit card, then transfer the balance to a long-term, low-rate and pay off the debt as and when you are able.

This is a lot easier to manage than traditional balance transfer credit cards. They might offer tempting rates of 0% for the first year, but then you revert to a high interest rate, typically around 17%. Or you are forced to keep switching provider and incurring transfer charges, continually chasing your tail to avoid the high interest.

It can be far easier to know you have a low rate that lasts.

And the best bit?

Long-term balance transfer rates are lower than personal loan rates, meaning they could offer you a cheaper borrowing solution.

Barclay’s Simplicity Card for example charges you 6.8% on any balance transferred - significantly less than you could achieve with a personal loan in the current market. The rate also applies to any purchases you subsequently make on the card. But beware of making cash withdrawals as you’ll be charged 15.8%. There is also a 2.5% fee when you transfer your balance.

The Capital One Platinum Card offers a slightly different approach - a fixed rate of 6.9% until 2012 on any balance transferred - with no transfer fee. If you think you could pay off the debt in within this time, this could be a very low-cost option compared to a personal loan.

Convenient, cheap and easy to understand, these long-term, low-rate credit cards are worth a serious look if you are planning any major purchases this year.

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Find out more about better borrowing at http://www.articletrader.com

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