4 ways to borrow a small amount of money

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Sometimes borrowing a small amount can be trickier or more expensive than taking out a larger loan. Here are some of the cheapest ways to borrow if you only need a small sum.

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You never know when you might need some extra cash. It could be for an unexpected expense you hadn't budgeted for, or because you want to take advantage of a great deal, but you might find yourself short on cash or not want to use up your savings so need to borrow it.

What are your options for borrowing a small amount of money?

If you want to borrow less than £1,000 you have several options to choose from. Each has its pros and cons, can affect your credit record in different ways and varies in cost.

Personal loan

Although personal loans are typically for borrowing larger amounts of between £5,000 and £25,000 or more, they are still worth considering if you only want to borrow a small amount.

How much does it cost? You may have to pay a higher rate for a smaller loan – the best rates apply to larger ones. Some lenders also won’t lend less than £1,000 so you may have a limited choice.

How long will it take? Small loans are no quicker than larger loans to arrange. After you apply you could know in as little as 24 hours if your application has been approved, and then the money could be in your account within one or two days.

Your credit record: You need a strong credit record to get the best rates. The loan will appear on your credit report and may limit how much more you can borrow, but manage your loan well and it will improve your credit record.


  • You make regular repayments

  • Paying the loan off can improve your credit record

  • Quick to apply for


  • You may not be able to borrow less than £1000

  • Interest rates are higher than for larger loans

  • You need a good credit history to apply

If you have a poor credit record you could apply for a guarantor loan instead of a standard personal loan, but you will need the help of a friend or family member, who will have to guarantee to pay back the loan if you can’t.

You could also look at bad credit loans. These are more expensive than standard personal loans but your application is more likely to be successful if you have had credit issues in the past. On the other hand, you may not be able to borrow as much as you need to. 

Credit card

Credit cards are typically a quick and easy way to borrow a small amount of money. Typically they are good for borrowing anything less than £5,000.

Most cards offer credit limits ranging from just a few hundred pounds to several thousands of pounds, depending on your circumstances, and you can borrow the exact amount you need.

How much does it cost? With a 0% on purchases card you can avoid paying any interest for a limited period. Alternatively, you could use a credit card to transfer cash into your bank account for a small fee with a 0% money transfer card. Make sure you pay off the card before the 0% period is up. You should avoid withdrawing cash with your card as it’s expensive – you’ll usually pay a fee as well as interest from day one, even if you pay your credit card bill off in full.

How long will it take? If you already have a credit card you can use it straight away while a 0% money transfer normally takes around two to three days. If you need to apply for a new card it could take over a week to arrive in the post.

Your credit record: You need a strong credit record to get the best cards. All credit cards appear on your credit report but if you use them sensibly, make your payments on time and stay within your credit limit they can help improve your credit rating.


  • A cheap way to borrow if you get a 0% card

  • Paying them off can improve your credit record

  • Quick to apply for


  • It can take a while for a new card to arrive

  • You need a strong credit history to get the best cards

  • Withdrawing cash is expensive

You can also check which credit cards you are likely to be approved for without affecting your credit record.

How to use a money transfer card


With an authorised overdraft you can borrow from your bank account by withdrawing cash or using your debit card.

How much does it cost? Some banks offer 0% overdrafts for small amounts or for a limited period, which can make this one of the cheapest ways to borrow. Many banks charge a standard overdraft rate of 39.9% EAR (equivalent annual rate) but others charge less or more.

How long will it take? If you already have a bank account, an overdraft could be added the same working day. If you have bad credit or a low income, it can take longer.

Your credit record: Your overdraft will be added to your credit record once approved. If you stay within your limit and manage your overdraft well it will improve your credit rating.


  • Flexible

  • Some banks offer 0% rates

  • Quick to arrange if you have an existing account


  • Your credit record must be strong

  • High fees apply if you exceed your overdraft limit

  • You need a bank account

How do overdrafts work?

Friends or family

Asking to borrow money from friends or family could be cheap and flexible, but is not always the best option.

How much does it cost? This all depends on what you agree with the person lending you the money, but borrowing from friends or family could be your cheapest option.

How long will it take? If the person you are borrowing from has the money available it could be the quickest way to borrow. Equally, if they need to transfer or borrow the money themselves it may take longer.

Your credit record: Friends and family are less likely to worry about your credit history and borrowing from them will not show on your credit record so will have no positive or negative effect on your credit rating.


  • It can be the cheapest option

  • No impact on your credit record

  • You can agree a loan term that suits you


  • You need willing friends or family

  • There will be no formal loan terms or rights

  • You’ll owe money to friends or family

If you’re thinking of asking to borrow money from a friend or family member, here's what they need to do to set up your loan to make sure you’re both happy.

Should you ever get a payday loan?

Short-term or payday loans are extremely expensive with APRs often in triple digits. It can be easy to fall into a debt trap and damage your credit record with them so it's best to steer clear. Read more about why it's better to avoid payday loans.

Compare loans

Need a loan? Compare loan lenders side by side to find one that is cheap to pay back, lets you borrow what you need and has repayments you can afford.

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