Hamlet may have said, “Neither a borrower nor a lender be” but he wasn’t living in modern-day Australia. Being a grown-up is expensive and most of us need to borrow money from time to time.

The good news is, you can do it without paying any (or much) interest!

Use your credit card for a loan. If you were going to borrow money to buy a second-hand car, for example, pay for it on a zero interest credit card. Your interest-free period can be anything from 6 months to 3 years, and there are heaps of 0% credit cards out there. The trick is to look out for annual fees.

Don’t apply in too many places. Each credit card application affects your credit rating so do your research before you go asking the banks for a handout. ASIC’s Money Smart provides a good overview of credit scores and how to find yours for free. To save yourself some time, find out if you’re eligible for credit anyway.

Keep the honeymoon going. If you’re organised, you can transfer your credit card balance to another 0% credit card but watch out for any balance transfer fees. And you really have to be organised to play this game. If you don’t pay off your credit card in time you’ll be stung with eye-watering fees and interest rates.

Search for balance transfer deals here. You’ll be hard pressed to find one without either a balance transfer fee or an annual fee but the Woolworths Platinum Everyday Rewards Card is currently the best bet.

Qualifying for micro-finance. If you’re in financial trouble or have a bad credit rating, the No Interest Loans Scheme is available through community organisations. But the amount lent is very small and you need to have a Centrelink healthcare or pension card. Find out more here.

Look into personal loans. For larger amounts, you will need a personal loan and they don’t come cheap. The banks provide borrowing calculators so you can find out how much you can realistically borrow. The lowest rate we could find was Society One at 7.5% plus fees for a minimum $5,000 loan. Money lending website Harmoney offers a rate of 5.95% but this balloons to 9.99% with fees. Rates depend on your risk profile and go down the more you borrow.

Avoid getting into hot water:

  •      Before you borrow, ask yourself: Have I planned for this? Can I afford it?
  •      Treat your 0% “loan” like a loan – set up a direct debit every month
  •      When you no longer need it, slice your credit card into tiny pieces and chuck it in the bin.
  •      Never withdraw cash on the card or use it on overseas transactions. You will rack up fees and be expected to pay interest.

Are you already in over your head? Don’t do this if you’re trying to get out of existing debt. Call the National Debt Helpline on 1800 007 007 and find a financial counsellor straight away. The sooner you tackle it, the more options you have for fixing it.

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