Thinking about borrowing money? There are a lot of ways you can borrow money also called ‘credit’

When can it be helpful?

  • Good for spreading cost of a bulk or large purchase
  • Good if you can afford the repayments on time
  • Good if your income and regular spending is stable

When should you think twice?

  • You are relying on it to buy everyday purchases like your food shopping
  • You keep adding to the borrowing or credit
  • You did not realise that there are extra costs like interest and other charges to pay back too
  • You can’t keep up with repayments
  • You have already taken out credit that you are trying to repay

If you don’t keep up the repayments, you could be taken to court and might even lose your home or other valuable possessions.

Before you borrow money – Check the small print

  • What are the total repayments? How much will it cost me?

Costs and charges involved in borrowing money

Banks or loan companies make money for letting you borrow from them.

They will often add ‘interest’ or charges on top of the original borrowing amount.

You will pay back the original amount loaned (called the ‘capital’) plus the interest.

How do I know what the Interest rate and charges are?

The cost of credit can vary greatly depending on the lender and the type of deal you choose. The things to look out for when comparing the cost of the credit deal are:

  • the Annual Percentage Rate (APR)
  • type of interest rate – variable and fixed rates
  • fees and charges


If you borrow £1000 and the Interest rate is 10%

You will pay back £1000 plus 10% (£100)

Total cost of borrowing over one year is £1100


If you would like further help and advice please follow the link below to our Citizens Advice website: