What each type of borrowing really costs
The same amount, borrowed for the same time, costs very different amounts depending on how you borrow it. Here's one example, side by side, and below it you can model your own.
Where the Bank of England publishes one, the rate below is the average people actually paid; for the rest it's a typical figure. None is any lender's. Advertised rates are often higher, and your own rate depends on the lender and your credit history.
Mortgages aren't here. They're borrowed over decades, secured on your home and priced in a way nothing else is, so they don't compare with the rest.
The rates used in the example below
APR is the yearly cost of borrowing, including interest on interest and any compulsory fees — so it's usually higher than the daily rate times 365.
| Kind of borrowing | A day | × 365 | APR |
|---|---|---|---|
| Credit cards | 0.053% | 19.5% | 21.6% |
| Credit card cash withdrawal | 0.072% | 26.2% | 30% |
| Overdrafts | 0.051% | 18.5% | 20.3% |
| Personal loans | 0.026% | 9.5% | 10% |
| Buy now pay later | 0% | 0% | 0% |
| High-cost short-term loans | 0.8% | 292% | 1,733% |
Here is my example: Borrowing £1,000 for 30 days
If it all goes to plan: paid back in full, on time.
| Kind of borrowing | Borrowed | Interest | Things to consider |
|---|---|---|---|
| Credit cards | £1,000.00 | £0.00 | No fees. This assumes the full balance is paid off after 30 days. |
| Credit card cash withdrawal | £1,000.00 | £21.80 | A cash fee of 3% of what you take out, at least £3 — so £30.00 on £1,000. |
| Overdrafts | £1,000.00 | £15.29 | No fees. Some accounts have an interest-free amount. |
| Personal loans | £1,000.00 | £52.38 over 1 year | Usually borrowed for 1 year or more and repaid monthly. Sometimes an arrangement fee for the agreement. Typically no monthly fees if paid on time. |
| Buy now pay later | £1,000.00 | £0.00 | No fees. Late fees if you miss a payment. |
| Car finance | Repaid monthly over years — not comparable here. | ||
| High-cost short-term loans | £1,000.00 | £240.00 | No fees. £15 if you miss a payment; the total cost is capped at the amount borrowed. |
If it goes wrong
Same amount borrowed, but you didn't make the payment on time.
The sums below assume it takes three months longer to pay back than planned, so interest keeps building for those three months, and you're charged one late-payment fee.
| Kind of borrowing | Interest | Fees | Total cost |
|---|---|---|---|
| Credit cards | £66.26 | Late fee £12.00 | £78.26 |
| Credit card cash withdrawal | £90.09 | Cash fee £30.00 Late fee £12.00 | £132.09 |
| Overdrafts | £62.56 | Typically none — but if you stay in the overdraft for more than a month, you also pay interest on the interest charged in earlier months. | £62.56 |
| Personal loans | £64.72 over 15 months | Missed-payment fee £15.00 | £79.72 |
| Buy now pay later | £0.00 | Late fee £12.00 | £12.00 |
| Car finance | Repaid monthly over years — not comparable here. | ||
| High-cost short-term loans | £960.00 | Default fee £15.00 The total can't go above the amount borrowed. | £975.00 |
Pay-later looks cheapest here because its fees are small. Its real risk when things go wrong is different: several plans running at once, a missed payment that can go on your credit file, and missed payments can end in court.
Tap to model your own scenario
Put in an amount, a number of days and a rate, and the cost appears here.
How the sums work
- One example, then yours. The two tables price the same example for each kind of borrowing: you borrow the money today and pay it all back in one go at the end. A personal loan is the exception — it's always paid back monthly. Below the tables you can try your own amount, time and rate.
- Credit cards, overdrafts and buy now pay later: interest is worked out as if it's added a little each day, so you're also paying interest on the interest. That's why the yearly rate (the APR) is exactly what a full year costs — £100 at 20% APR for a year costs £20 — while a few weeks costs slightly less than the same share of that £20.
- High-cost short-term loans (payday loans) are set by law: a fixed daily charge on what you borrowed, never interest on interest. And interest and fees together can never be more than you borrowed — borrow £100 and the most you can ever pay back is £200.
- If it goes wrong: the same sums, but over three months longer, plus one late-payment fee, plus the cash fee if you took cash out on a card. Missing a payment also ends a credit card's interest-free period, so interest is charged from the first day. A high-cost loan still can't cost more than you borrowed.
- Paying only the minimum (credit cards, in your own scenario): each month you pay whichever is bigger — the card's fixed minimum payment, or a small share of what you owe plus that month's interest.
- Fees aren't added into the interest in the first table, because whether you pay them depends on what you do — pay late, or take cash out. They're listed alongside, with the usual amount where there is one.
- Credit cards usually charge no interest on purchases if you clear the whole bill by the due date. Cash taken out on a card gets no interest-free period. Personal loans are paid back in equal monthly payments, so they're worked out that way: over a year in the tables, and over the months you choose in your own scenario. Car finance isn't here — it's paid back over years, for a car, so it doesn't compare.
Where to go next
Interest and APR · The main ways to borrow · Risks and warning signs
Average rates from the Bank of England, legal limits from the FCA, and typical figures from MoneyHelper and Citizens Advice. None is a quote. Facts last checked October 2026. I check them every month, to catch rates and rules that change.