Borrowing in real life

• A credit card Nothing in interest if cleared by the next bill; 25% to 60% a year advertised on a balance carried.
• An overdraft About 19% to 40% or more a year, worked out daily.
• A personal loan A rate fixed for the whole loan, and the total known before you sign.
• Finance arranged through the installer Sometimes at 0% for a set time.

A 0% offer through the installer is credit like any other, with an end date, after which the ordinary rate applies to whatever is left. And paying on a credit card for anything over £100 and up to £30,000 makes the card company responsible alongside the installer if the job goes wrong.

• Hire purchase A deposit, monthly payments, and the car is yours at the end.
• Personal contract purchase Lower monthly payments, then a large final payment to keep the car, or hand it back.
• A personal loan The car is yours from day one and the loan is separate from it.

With either kind of car finance the car is the security, and until a third is paid it can be taken back without a court. A personal contract purchase sets a yearly mileage limit, and a low monthly payment can hide a big final one. Lining up the total cost of each, not the monthly payment, is what compares like with like.

• An overdraft
• A credit card

The borrowing costs interest the whole time it's unpaid, even though the deposit itself is sitting in a scheme. In England and Wales, the landlord has to protect the deposit in a government-approved scheme within 30 days, which is what makes getting it back at the end more than a hope.

• Buy now pay later Usually no interest on the short plans; a fee for a missed payment.
• Finance from the shop Sometimes 0% for a set time.
• A credit card including a 0% deal on purchases.
• A phone contract that includes the handset

Several pay-later plans at once, and losing track of the total. A 0% deal's end date. And the rules: since 15 July 2026, pay-later plans from a company that isn't the shop itself are regulated, but a plan run by the shop, or taken out before that date, isn't.

• A personal loan
• A credit card including a 0% deal.
• Buy now pay later increasingly for travel.

A five-year loan for a fortnight away is still being paid four years after you're home. And a 0% deal that hasn't been cleared by the time it ends starts charging the ordinary rate on what's left.

• An overdraft About 19% to 40% or more a year, worked out daily.
• A credit card
• A high-cost short-term loan Capped at 0.8% a day, and never more than you borrowed, on top.

One short month is one thing. When the gap comes back every month, the borrowing becomes how the month works, and that's the first pattern on Risks and warning signs.

• A mortgage with a deposit from savings.
• A mortgage with a deposit that's partly money from family.

The mortgage lender will want to know whether family money is a gift or a loan, because a loan is another debt to repay. It will also see your student loan on your payslip, even though it isn't on your credit file. And when a fixed deal ends, the payment can jump. The main ways to borrow has the mortgage on its own.