Expert tips on borrowing cash, from everyday spending to £20k loans

What's happening

With UK household energy bills remaining elevated following successive price cap increases, many consumers are turning to credit products to bridge the gap between income and outgoings. A new expert guide published by The Guardian sets out the cheapest ways to borrow money in 2026, covering everything from small everyday purchases to loans of up to £20,000.

The guidance covers three main borrowing routes:

• Buy now pay later (BNPL): Short-term, often interest-free credit spread over weeks or months. Providers include Klarna, Clearpay and PayPal Pay in 3. Useful for managing cash flow, but missed payments can trigger fees and damage your credit score.
• 0% purchase credit cards: These charge no interest on new spending for a promotional period — typically 12 to 24 months. They are widely considered the cheapest way to borrow small amounts, provided the balance is cleared before the 0% window closes.
• Personal loans: For larger sums — say, £3,000 to £20,000 — a fixed-rate personal loan from a bank or credit union usually offers a lower annual percentage rate (APR) than a credit card outside a 0% deal. Credit unions in particular offer capped rates and are accessible to people with lower credit scores.

Experts quoted in the piece stress that the total cost of borrowing — not just the monthly repayment — is the figure consumers should focus on when comparing products.

What this means for household energy bills

Energy bills are one of the largest fixed costs for UK households. When the price cap rises or an unexpected bill arrives, many people reach for credit to cover the shortfall. Understanding which credit product is cheapest can make a meaningful difference to the total amount repaid.

For example, using a high-APR credit card (typically 20–30% APR) to carry an energy-related balance of £500 for 12 months could cost £60–£150 in interest alone. The same balance on a 0% purchase card, cleared within the promotional period, would cost nothing in interest.

BNPL is not directly available for energy bills, but it can free up cash for other household spending — effectively acting as a short-term buffer. However, this only works if repayments are met on time. Late fees and the potential for debt to escalate make BNPL a tool that requires careful management.

For households carrying significant energy debt — arrears owed directly to a supplier — a personal loan at a lower interest rate may be worth considering as a consolidation tool, though this should only be explored after speaking to the supplier directly about a repayment plan.

Important: Ofgem rules require energy suppliers to offer customers in debt a repayment plan that is affordable based on their circumstances. This should always be the first step before taking on new credit.

Who is affected

This guidance is relevant to a broad range of UK households, but is particularly pertinent for:

• Households on lower incomes who are more likely to use credit to cover essential bills and are at greater risk of high-cost borrowing.
• Renters who may have less financial resilience and fewer assets to fall back on.
• Families with prepayment meters, who sometimes face higher effective unit rates and may struggle to top up during cold spells.
• Anyone who has accumulated energy arrears and is weighing up whether to consolidate debt.
• Consumers considering BNPL for everyday purchases, who may not fully understand the consequences of missed payments.

According to Citizens Advice, millions of UK households were in energy debt at some point during 2024–25, and the number seeking help with energy arrears remains high.

What you can do now

Here are practical steps you can take today:

1. Contact your energy supplier first. If you are struggling to pay your bill, call your supplier before reaching for a credit card. Suppliers are legally required under Ofgem rules to agree an affordable repayment plan. You may also be eligible for hardship funds or the Warm Home Discount.

1. Compare 0% purchase credit cards. If you need short-term credit for everyday costs, a 0% purchase card is typically the cheapest option. Use a comparison site to find the longest 0% period available to you, and set up a direct debit to clear the balance before the deal ends.

1. Avoid high-APR credit for energy debt. Carrying an energy-related balance on a standard credit card at 20%+ APR is expensive. If you already have credit card debt, look at whether a 0% balance transfer card could reduce your interest costs.

1. Consider a credit union for larger borrowing. If you need to borrow more than a few hundred pounds, a credit union loan often has a lower APR than a bank personal loan and is more accessible to people with imperfect credit histories. Find your local credit union at findyourcreditunion.co.uk.

1. Use BNPL cautiously. Only use buy now pay later if you are certain you can repay within the interest-free window. Set a calendar reminder for the repayment date and never use BNPL to cover costs you cannot afford.

1. Get free debt advice if needed. If your debts feel unmanageable, contact StepChange, Citizens Advice or the National Debtline — all free and confidential.

1. Check whether you are on the best energy tariff. Switching to a cheaper deal can reduce the amount you need to borrow in the first place. Taupia can help you understand your current energy costs and identify whether a better deal is available to you.

This article is based on reporting by The Guardian and is intended as general information only. It does not constitute financial advice. If you are in debt, please seek guidance from a free, regulated debt advice service.