Borrowing money

At times it’s good to have the option of borrowing money. For example making home improvements, buying a new car or planning a wedding. But it’s important to find out what’s right for you. Ultimately any loan, credit card or overdraft you use or take out will need to be repaid. There are different ways of borrowing so take time to find the right one that suits you and your current circumstances. As with any borrowing, you should only take on what you can comfortably afford.

Credit Cards

When you apply for a credit card you are effectively taking out an unsecured loan. This amount is your credit limit and the credit card provider will determine the amount based on factors such as your credit history and how many other outstanding debts you currently have. If you reach the credit limit on your card you must stop using it while you pay off the amount you owe. You should only use a credit card for short term borrowing and smaller amounts as it will generally have a higher interest rate than a loan. To make sure you do not miss any payments set up a direct debit for at least your minimum payment each month. Ideally you should clear your credit card every month to avoid interest. If you are having problems meeting even the minimum payment then contact your card provider as soon as possible.

Secured and Unsecured Loans

There are two types of personal loan: secured and unsecured. A secured loan, such as a mortgage, is attached to something you own such as your home. If you can’t repay the loan the lender has the right to sell your property to get their money back. An unsecured loan doesn’t require you to provide security against the money you are borrowing, but you are still required to pay the money you owe. With either type of loan, you borrow a fixed amount of money and then pay it back with interest over a fixed period of time. Make sure you are aware of any early repayment charges or late payment charges associated with your loan. If you are having problems meeting your monthly loan repayments then make sure you contact your lender as soon as possible to discuss your options.

You may find you can make things a bit easier for a while by:

  • Extending the term of your loan to reduce your monthly payments
  • By taking a repayment holiday


An overdraft allows you to borrow money through your current account. It can be easy to think of your overdraft limit as your spending limit but it should only be used for emergencies or short term borrowing. An arranged overdraft is an overdraft that your current account provider has approved for you, and you can borrow up to that limit. They will usually only charge you interest and/or fees if you actually use it.


Different current accounts have their own interest rates. Make sure you understand these fully before you use or apply for an arranged overdraft and always avoid going overdrawn on your current account if you do not have an arranged overdraft agreement in place.

Make sure you are aware of the following key information before applying for, or using, an arranged overdraft:

  • The monthly account fee (if you have a current account that charges one)
  • Arranged overdraft Usage Fees
  • The interest rate for an arranged overdraft
  • Any fees or charges if you go over your arranged overdraft

The information contained in this article has been prepared by Bank of Ireland for information purposes only. Bank of Ireland believes any information contained in the article to be accurate and correct at the time of publishing.