A lowdown on the latest low rate borrowing deals for 2013

We’re barely a week into the New Year and already the battle for consumer credit is in full swing with a flurry of new deals and rate cuts from personal loan and credit card providers.

Tesco Bank has taken top spot in the best buys for personal loans with its new rate of 5.2% APR for amounts of £7,500 or more. Derbyshire BS and Sainsbury’s Bank are a close second at 5.4%, but even though they are charging 0.2% more, the difference in monthly repayment costs is negligible.

For example £7,500 over 5 years costs £225.05 per month with the Tesco best buy, but it’s only 64 pence per month cheaper than Sainsbury’s Bank and Derbyshire Building Society at £225.69. Over the course of the full 5 year term you could save £38.40 – nothing to get too excited about but as the Tesco strapline says – every little helps!

Co-operative Bank has cut its rates too, also offering 5.4% APR for loans of £7.5k plus for its packaged account customers, 5.5% APR for current account customers and 5.6% APR for new borrowers.

If you’re looking to borrow a smaller sum then tough luck, the main players just aren’t interested unless you want to pay upwards of 16% APR for a £3000 loan – you’re better off checking out the peer to peer lenders such as Zopa or RateSetter where you can currently grab a sub 9 per cent deal.

There are still plenty of 0% balance transfer deals if your credit record is up to scratch with Barclaycard leading the way offering interest free borrowing for two whole years or 4.9% fixed for three years.

There are a couple of rate for life credit card deals worth a shout too – AA is offering 6.9% for life subject to a one off money transfer fee of 2% and MBNA has a similar deal at 5.9% and has just reduced its money transfer fee from 4% to 1.5%.

Money transfers give you more flexibility than a balance transfer deal as you’re not limited to switching funds between cards. With a money transfer you can pay the funds into your current account – so it’s potentially a cheap way of clearing that stubborn overdraft once and for all if you’re financially disciplined.

It’s the prime time of the year for people looking to sort out their finances, so I fully expect to see some more tempting offers springing up in the next couple of weeks.

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