Cheapest credit cards, loans or grants – where to borrow money if you need extra help during coronaviris crisis – The Sun

IF you're struggling to get by due to the coronavirus crisis, borrowing cash might feel like your only option.

But you should use it as a last resort and make sure you choose the right product for you, or you could find yourself paying more than you need to.

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If you’re able to borrow some money from family or friends, this could be a cheap way of getting extra cash without paying high interest rates.

Of course, this isn't always possible though so below we've rounded up the cheapest credit cards and loans.

We also explain how to apply for charity and government grants.

Eleanor Williams, finance expert at Moneyfacts, told The Sun: "Although it is never advisable to take on debt to manage day-to-day living costs, we are currently living in extraordinary times and some may feel that having access to credit might be a sensible back-up plan for emergencies.

"It will be vital to ensure borrowers are confident they will be able to meet all repayments on any credit they borrow and carefully check the details of what they are offered."


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She added: "A 0 per cent purchase credit card may be an option for some to consider as this does not commit them to taking out further credit immediately.

“For those who have a need to borrow a larger amount of money, then one benefit of a loan would be a set repayment schedule with a fixed end date.

"This would mean they can be confident that the debt will be repaid in full after a period of time.

"It is important that anyone who is concerned about being able to meet their monthly commitments seeks qualified, independent financial advice and maintains communication with their providers."

Cheapest credit cards

Used correctly a purchase credit card can help you get by without racking up hefty interest charges.

The longest interest-free deals on the market currently stretch to 27 months – giving you the chance to pay off your debt in over two years.

The Sun has listed the cards with the longest 0 per cent periods currently on the market below but first, a word of warning.

Always be responsible when it comes to spending on credit cards – try and clear your balance in full each month and do so within the 0 per cent purchase period, otherwise you'll start paying interest on your balance.

Also keep in mind that only those with the very best credit histories will get accepted for the cards that have lengthy 0 per cent periods.

You can check which credit cards you’re likely to be accepted for without damaging your credit score by using a pre-eligibility checker by MoneySavingExpert or uSwitch.

Instead some providers could offer you a deal with a shorter period.

We've explained how to check your credit score in the box below.

The credit cards with the longest 0 per cent period

  • Barclaycard Platinum 27 Month Purchase and Balance Transfer Visa – Apply Here

This card from Barclaycard comes with a 0 per cent deal of up to 27 months on purchases.

You also don't have to pay interest for 27 months on balance transfers, although a 3.5 per cent fee applies.

If you don't clear your balance by the end of the 27 months, you 'll be charged 21.9 per cent in interest.

  • Sainsbury's Bank Dual Offer Credit Card – Apply Here

Sainsbury's credit card comes with a 0 per cent purchase and balance transfer period of 26 months, so you can pay down your existing debt and stop incurring interest for over two years.

Just keep in mind that it comes with a balance transfer fee of 3 per cent, at a minimum of £3.

After the 0 per cent period comes to an end, the card will revert to an APR of 20.9 per cent on purchases.

If you give your Nectar card number when you apply, you'll get 750 bonus Nectar points worth £3.75 each time you spend at least £35 at Sainsbury's in the first two months up to a maximum of 7,500 points.

  • MBNA 26 Month Transfer and Purchase Credit Card Mastercard – Apply Here

MBNA also offers an interest-free period on both balance transfers and purchases for 26 months.

Just make sure you pay off any debts before the 26 months are up, or you'll have to pay 20.9 per cent in interest.

If you're transferring debts, you'll also pay a 5 per cent fee on the balance.

How do I check my credit report?

TWO thirds of Brits have no idea what their credit score is, so it's worth checking yours to see if you need to improve it.

All three CRAs offer you the chance to view your score, report and more for a monthly fee BUT you can get hold of your score for free without paying for a subscription.

Experian – Sign-up to its CreditMatcher service which will give you access to your score and help you shop around for deals you are likely to be accepted for. If you want access to your full report you'll pay £14.99 a month after a 30-day trial period ends.

Equifax – You can get your Equifax report AND score through a website called Clearscore. If you go to Equifax directly you'll pay £14.95 a month after its 30-day free trial.

TransUnion (formerly Callcredit) – You can access your TransUnion credit report through Credit Karma (formerly Noddle). It it will offer you credit cards and loans that you qualify for, though you don't have to apply for anything to use the free report service.

You also have a legal right to access your report from each CRA for just £2 – but this won't include your score.

The best credit cards if you have a poor credit score

If you have large amounts of debt or missed payments, chances are you won't have the best credit score.

If so, it's unlikely that you'll get accepted for the above rates – instead, you may want to consider the below cards.

  • Tandem Bank Journey Credit Card – Apply Here

Purchase APR: 24.9 per cent

Cash withdrawal interest rate: 24.9 per cent

Credit limit: £1,200

  • Tesco Bank Foundation Clubcard Credit Card – Apply Here

Purchase APR: 27.5 per cent

Cash withdrawal interest rate: 39.94 per cent

Credit limit: £1,200

Cheapest loans

Some lenders have stopped allowing applications or increased rates due to the coronavirus, and others have tightened acceptance criteria.

But for now, a few good deals still exist so with data compiled by Moneyfacts, we've put together the cheapest loans currently out there.

Remember that the deal you'll get will depend not just on your credit history but the loan provider's criteria.

All loan rates are "representative", which means that only 51 per per cent of successful applicants have to get the rate, so you could successfully apply but get a more expensive deal.

Once again, you can check which loans you’re likely to be accepted for without damaging your credit score by using MoneySavingExpert's pre-eligibility checker.

Also remember that the longer you take the loan out for the lower your monthly payments, but the interest you'll pay will soon add-up.

So it's worth working out how much you can afford to pay in the smallest amount of time.

You'll also need to make sure you can afford to meet all the monthly repayments over the length of the term.

Cheapest loans for £5,000

The deals below are calculated on a repayment term of three years (36 months).

If you increase the length of your term, you'll lower your monthly repayments but pay more interest overall.

  • Tesco Bank APR 3.4 per cent – Apply Here

Monthly repayment: £146.17

Total amount payable: £5262,12

Interest payable: £262.12

  • Clydesdale Bank 3.50 per cent – Apply Here

Monthly repayment: £146,39

Total amount payable:£5270,04

Interest payable: £270.04

  • Hitachi Personal Finance APR 3.50 per cent – Apply Here

Monthly repayment: £146,39

Total amount payable: £5270,04

Interest payable: £270.04

Credit union loans

Credit unions are locally-based organisations where members pool their savings to lend to one another.

This often allows them to offer low cost products and there are hopes that the sector can provide an alternative source of finance to banks and high cost pay day lenders.

They can offer a range of savings accounts, current accounts and loans to their members.

Because credit unions are owned by their members and are not-for-profit, you can often get a better rate than most high-street lenders.

Some unions require that you have already saved money with them before you can take out a loan, but others don’t.

Interest rates can vary, but are capped by law at 42.6 per cent APR, which is considerably less than many short-term loans, including a payday loan.

You can get information about credit unions and find your local one from the Association of British Credit Unions (ABCUL) or the ACE Credit Union Services website.

High cost credit loans

If your credit rating isn’t so great and cheaper borrowing may not be an option for you, you may be tempted by other forms of high cost credit, such as a payday loan.

It could seem like a quick fix if you’re only going to have to cope with a drop in income for a couple of weeks.

But these forms of credit can work out to be very expensive and you need to think very carefully before you decide to borrow in this way.

Sara Williams, of debt blog Debt Camel, told The Sun there are "very few situations" when a payday lender is a good idea.

If your income has gone south due to the coronavirus crisis, you're also unlikely to pass the affordability criteria required.

Instead, you should make sure to apply for every bit of government help you can get.

If you must apply for high cost credit, you should apply for the one you're most likely to get accepted for and not focus on the rate, she added.

Government and charity grants

Government support for workers

If you're facing a drop in income because your employer has had to temporarily lay you off, your boss might put you on the coronavirus job retention scheme.

It means that the government will cover up to 80 per cent of your wage – up to £2,500 a month.

If you’re self-employed, the income support scheme might cover up to 80 percent of your profit based on previous tax returns for three years.

But it’s likely you will have to wait a while for this money if you’re eligible.

Council and charity grants

If that isn't enough to help you get by, you may be able to apply for your council’s local welfare assistance scheme.

These schemes are usually available to people on a low income that are facing financial difficulty.

Each council runs its own scheme with different qualifying criteria, with some offering small cash loans or grants, food vouchers, free used furniture and so on.

Different emergency funding is available depending on where you live in the UK, so you'll need to contact your council for more information.

You may also be able to apply for certain charity grants if you end up in financial difficulty.

Turn2Us is a charity that helps people in financial difficulty access grants and support services.

It can also help you check if you’re eligible for benefits or other grants that could help to improve your situation.

These are the banks that are giving mortgage holidays and bigger overdrafts if you’re struggling due to coronavirus.

Plus, here's how to get help paying bills.

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