ClearScore is a credit broker, not a lender.

If you need to borrow money, two commonly used options are 0% purchase credit cards and personal loans. Both allow you to spread the cost of a purchase over time, but they work differently and suit different situations.

This article explains how each works, what to watch out for, and some of the factors that may be relevant when thinking about which approach fits a particular need. It does not constitute financial advice; if you are unsure what is right for your circumstances, consider seeking independent advice.

Always make sure you can afford repayments.

0% purchase credit cards

A 0% purchase credit card charges no interest on new spending for a set promotional period. The longest 0% purchase periods currently available in the UK are up to 26 months, with most competitive cards offering between 12 and 26 months interest-free. After the promotional period ends, any remaining balance reverts to the card's standard purchase rate, which currently averages around 25% APR on top cards.

Key things to be aware of:

The promotional period — the interest-free window is fixed from the date the account opens, not from the date of the first purchase. And the actual length offered may be shorter than the headline figure depending on individual credit profile (e.g. more risky credit profiles might be offered a shorter 0% period). Some cards offer a guaranteed promotional period to all accepted applicants; others advertise an "up to" figure where the length depends on the applicant's credit history.

Minimum payments — to keep the 0% offer, at least the minimum monthly payment must be made on time each month. Missing a payment or exceeding the credit limit could result in losing the promotional rate and being charged interest from that point.

Credit limits — the credit limit offered is determined by the lender based on individual circumstances and may not be known until after application. It may not be sufficient for very large purchases.

Cash withdrawals — withdrawing cash on a 0% purchase card is generally not included in the 0% offer. Cash advances typically attract interest immediately at a higher rate. A separate 0% money transfer card, which allows funds to be moved to a bank account, may be an option for those who need cash, though a transfer fee of typically 3–4% usually applies.

Credit checks — applying for a credit card results in a hard search on your credit file. Using a soft-search eligibility checker before applying allows you to see your likelihood of acceptance without affecting your credit score.

Section 75 protection — purchases between £100 and £30,000 made on a credit card are protected under Section 75 of the Consumer Credit Act, meaning the card provider is jointly liable with the retailer if something goes wrong with the purchase. This protection does not apply to debit cards or cash.

Personal loans

A personal loan provides a fixed lump sum, repaid in fixed monthly instalments over an agreed term, with interest charged on the amount borrowed throughout.

The most competitive personal loan rates in the UK currently start from around 5.6% APR, typically available on amounts between £7,500 and £15,000 for applicants with strong credit histories. The average rate on a £10,000 loan over five years is currently around 8.0% APR.

Rates can be higher on smaller amounts. The most competitive representative rate on a £5,000 loan over three years is currently around 6.9% APR, rising to around 9.6% at the less competitive end of the market (for example, for riskier credit profiles).

Key things to be aware of:

Fixed repayments — unlike a credit card, a personal loan has fixed monthly repayments from the outset, which can make budgeting more straightforward.

Representative APR — the advertised rate is a representative APR, meaning it must be offered to at least 51% of successful applicants. The rate actually offered may be higher depending on individual credit profile and circumstances.

Loan amount and rate tiers — many lenders offer lower rates on amounts above £7,500, because the margin per pound lent is lower on larger amounts. This means the total interest cost on a slightly larger loan may in some cases be lower than on a smaller one, but this should be evaluated carefully against what is actually needed, and borrowing more than necessary purely to access a lower rate tier carries its own risks.

Early repayment — most personal loans allow overpayments, but full early repayment may attract a penalty of up to 58 days' interest under Consumer Credit regulations.

Credit checks — as with credit cards, a hard search is carried out on application. Soft-search eligibility checkers are widely available from comparison sites.

Which might suit which situation?

There is no universal answer. The right approach depends on individual circumstances including the amount needed, repayment discipline, credit profile, and whether cash or direct card payment is required.

But, there are some broad considerations to keep in mind:

For smaller purchases that can be repaid within a promotional period, a 0% credit card means no interest is paid at all — something a personal loan cannot match, since interest applies from day one. However, this relies on the balance being cleared before the promotional period ends.

For larger amounts where a credit card limit may be insufficient, or where the structure of fixed monthly repayments is preferable, a personal loan may be more suitable.

For those who are not confident they can clear a credit card balance within the promotional window, a personal loan's fixed term and known total cost may make it easier to plan repayments.

Rates and terms correct as of July 2026. Both credit cards and personal loans are subject to eligibility and individual credit assessment. This article is for general information only and does not constitute financial advice. If you are struggling with debt, free impartial advice is available from StepChange, National Debtline and Citizens Advice.