Cutting your borrowing bills

Want to know how to cut the cost of your borrowing, but don't know where to start? Here are the main types of borrowing you have and the pros and cons of each option to help you decide what's right for you

Shorter-term borrowing

You may want to think about:

1. Consolidating your debts

If you talk to your bank and agree an overdraft, or take out a loan, you may pay a lower rate of interest than on a credit card. But you may get a better deal if you just need the money for a short period by taking out a credit card with a free introductory offer period. Do your sums and compare rates and time periods. Consider:

Any loan or overdraft arrangement fees you might be charged
How long you need the money for
The interest rates being charged

2. Considering your credit card

If you opt for a credit card, weigh up the benefits of each carefully. Some offer great introductory rates of interest, but always check how long the discounted rate lasts, and what the long-term rate is. Consider:

The introductory rate and standard rates
The length of the introductory offer or interest-free period
If you need to pay an annual charge
Any other additional benefits it brings, like loyalty points, cash back, air miles etc

3. Shopping around for loans
Many companies offer discounts on loans if you apply on the internet

There are many online loan comparison sites. These allow you to compare loans from lots of different providers easily

4. Agreeing overdrafts in advance
If there is the chance you'll go overdrawn, make sure you agree an overdraft in advance. Even if you have to pay a fee to arrange your overdraft and pay interest when you are overdrawn, it is still likely to be cheaper than going overdrawn without permission

Longer-term borrowing

Look at what you spend the most on each month first, as these may be the areas where you can make the most cost savings. For most people, paying a mortgage is the biggest long-term borrowing they have, so it makes sense to look at this first

5. Look at your mortgage first

Remember when it comes to mortgages, you don't need to be stuck with the same lender for 25 years! It pays to shop around for your mortgage, as you could save money by switching to another lender. Consider:

The type of mortgage that suits you - there are lots of different types from flexible repayments, fixed interest rate, to capped rates

Some lenders will pay the fees you incur, like a new survey or a repayment fee if you switch to them

Look at online mortgage finder sites to see if you could save money by switching your mortgage