If you’re looking to borrow some cash over the short to medium term, personal loans and 0% credit cards are two of the most popular options. Both allow you to fund the purchase of a one-off item or to fund home improvements at a low interest rate.

While personal loans are often seen as the first choice for many people, 0% purchase credit cards can actually be better than a personal loan for several reasons. Our guide explains why.

Pay less interest with 0% credit cards

0% purchase credit cards allow you to benefit from a period (typically 6-12 months) where you pay no interest on your credit card borrowing. This means that if you’re planning to pay off a one-off purchase within the nil rate period, 0% credit cards can offer you interest-free credit on your borrowing.

This is where the best credit cards for purchases compare favourably to a personal loan. Even if you secure a low rate personal loan, you will still end up paying some interest even if you pay off the loan within a short term.

Make sure you repay the card balance before the 0% period expires

If you plan to use 0% purchase credit cards to borrow, make sure that you will be able to repay the total card balance before your 0% deal expires.

If you don’t, you could end up paying more interest than on a personal loan. This is because credit card interest rates tend to be higher than unsecured loan rates.

Shop around to compare credit cards

When looking for 0% credit cards, make sure you do your homework. There are a number of different 0% credit cards available so make sure you find the right one for you. For example, some only offer 0% interest on certain purchases or at certain stores.

Make sure you do your research and compare credit cards to find the right interest free deal for you.