Money Insider: Switching a personal loan could save you money


I've often suggested ways you can save money by switching to new credit card and mortgage deals, but some research released this week shows that people in debt may benefit by refinancing their personal loan balance.

The report from Sainsbury's Bank claims that about 8.5 million people have an outstanding personal loan, with more than 1.3 million taken out at least three years ago. Back then, of course, interest rates were far more expensive.

For example, if you borrowed £10,000 over five years in July 2010, the best rate available was 7.8 per cent APR if your credit rating was good. However, today it's possible to borrow that at 4.8 per cent APR from Zopa, 4.9 per cent APR from Nationwide Building Society (as long as you're a current account customer of the mutual) and 5.1 per cent APR from Sainsbury's Bank.

As always there are some caveats. For starters, the majority of lenders will charge an early settlement fee for those wishing to pay off their loan early. However, the charge is capped at 56 days' interest, and for the majority of people switching to a lower rate, the savings from a reduced interest rate will more than offset this cost.

It's also important to remember that the interest rate you will pay on a new loan is dependent on your credit rating.

If you want to find out if you can save some money by taking out a replacement personal loan, Sainsbury's Bank has created a calculator on its website which enables you to check the total future costs of your borrowing, and whether it is worth switching to another lender.

Credit card round-up

I was pleased to see the launch of a new credit card comparison website from the UK cards association which can be found at

This is a really useful resource and something that all credit card holders could benefit from looking at.

It's really simple to use and will help more people appreciate the real cost of borrowing on plastic. When you see the costs in terms of pounds and pence, it's far more powerful as well as more helpful than trying to figure out the difference in APRs. The calculator will also help people realise how much they can save by paying a little bit more off their card balance each month.

As for recent activity in the credit card market, there are a few new products worth a mention.

First there's the new Fluid credit card offering 0 per cent for 16 months on purchases and 0 per cent for 14 months on balance transfers (subject to a one-off balance transfer fee of 2.9 per cent).

It's a good all-rounder, plus there's a very handy "pre apply" facility online so you know upfront if you're likely to be accepted or not without making a footprint on your credit record. It's a shame that more providers don't offer this option rather than letting someone spend 10-20 minutes ploughing through an application only for them to be declined or offered an inferior rate.

Another new card launch for those who are looking to earn something for their spending is the American Express Platinum Cashback Everyday Card.

You can earn 5 per cent cashback during the first three months (up to a maximum £100) and then 0.5 per cent to 1.25 per cent after the promotion, depending on the amount you spend on the card over the year.

For borrowers in search of a long-term balance transfer offer, Tesco Bank and NatWest (Platinum) now both offer 27 months at 0 per cent on balance transfers equalling the long-term market leader, Barclaycard.

Both the NatWest and Tesco BT fees of 3.1 per cent and 3.15 per cent respectively are slightly higher than the Barclaycard deal at 2.99 per cent, but at least offer a fresh option for Barclaycard customers coming to the end of a current 0 per cent deal.

Andrew Hagger is an independent personal finance analyst from

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

    'We will not sit down with Nicola Sturgeon'

    In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
    VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

    How ordinary Britons celebrated VE Day

    Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
    They came in with William Caxton's printing press, but typefaces still matter in the digital age

    Typefaces still matter in the digital age

    A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
    Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

    'Missing link' between Earth's two life-forms found

    New microbial species tells us something about our dark past, say scientists
    The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

    Pan Am Experience: A 'flight' back to the 70s

    Tim Walker checks in and checks out a four-hour journey with a difference
    Humans aren't alone in indulging in politics - it's everywhere in the animal world

    Humans aren't alone in indulging in politics

    Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
    Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

    Crisp sales are in decline

    As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
    Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

    Ronald McDonald the muse

    A new wave of artists is taking inspiration from the fast food chain
    13 best picnic blankets

    13 best picnic blankets

    Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
    Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

    Barcelona vs Bayern Munich player ratings

    Lionel Messi scores twice - but does he score highest in our ratings?
    Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

    Explosive batsman who sets the range for Kiwis' big guns

    Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'