Understanding your borrowing options
Whether it’s sprucing up your home, that broken boiler you weren’t planning to replace anytime soon or a new set of wheels - there are countless reasons why you might want to borrow money.
At M&S Bank we have a couple of borrowing options available, but it’s important to understand more about the types of borrowing first before deciding what is best for you.
Credit cards
A credit card is where you can spend up to an agreed credit limit and can be used to pay for goods and services that accept credit card payments. You then pay back what you’ve borrowed later by making at least the monthly minimum payment until you’ve paid back what you owe. Unless you have an interest-free offer period, you’ll usually be charged interest if you don’t repay the full balance of what you’ve borrowed that month.
Interest is still charged on some transaction types regardless if the full balance is repaid each month. See M&S Credit Card Terms and Conditions for more information.
What are the benefits of a credit card?
- We have multiple card offers that give you different interest-free periods on purchases and/or balance transfers. That means you could make at least the monthly minimum payment and not be charged interest*. Balance transfer fees apply. Credit is subject to status.M&S Credit Card Representative example 24.9% Purchase rate p.a (variable), 24.9% APR Representative (variable), £1,200 Assumed credit limit.
- You collect Rewards points when you spend on an M&S Credit Card and they're converted into M&S vouchers for you to spend online and in-store
- Certain purchases are protected when you make them with a credit card, which means you can claim your money back if there’s a problem with your purchase. Learn more about credit card security and protection
- You can spread the cost over monthly instalments at an amount you choose (but you must make at least the monthly minimum amount due)
- If you wanted to, you can add an additional cardholder where they can have their own card but it’s linked to the same account
- You can continue to use your card (within your credit limit) until you decide to close it
What are the disadvantages of credit cards?
- The credit limit you receive may not be enough to fulfil your plans
- Outside of an offer period, interest can start to pile up if you only make the minimum payment due each month
- If you miss payments, you’ll receive additional fees and charges
- You’ll be charged for certain things which are normally free with a debit card such as withdrawing cash from an ATM
- You could run the risk of overspending, taking you longer to pay off what you owe
- Not all goods and services can be purchased with a credit card, so it’s worth checking if you have plans on what you intend to use your card for to see if this is a method of payment that’s accepted
A personal loan is a way to access a lump sum of money, used normally for large purchases like home improvements, a wedding or a new car. With a personal loan, you agree to pay back the money you’re borrowing at a fixed amount each month for a set period of time until the balance is repaid in full. You’re charged interest on the amount you’re borrowing which is factored into the fixed amount you agree to pay each month.
What are the benefits of a credit card?
- You can ask for the amount you need and subject to your application being accepted, you’ll know exactly what your repayments are each month and for how long
- You can use a personal loan for debt consolidation
- When you take out a personal loan your repayments are a fixed amount for a period of time, but you can make overpayments if you can afford to do so at anytime which may reduce the interest owed and term of the loan
What are the disadvantages of credit cards?
- This type of borrowing may not be suitable if you plan to repay the full balance within a short period of time and does not include purchase protection like a credit card purchase
- Missing payments could mean that it takes you longer to repay the loan in full
- If you want to borrow more money in the future, you’d need to apply again for an additional credit product
Confused by personal loans?
If you want to learn more about how a personal loan works visit our useful article to learn more.
