B
Base Rate
The base rate, sometimes referred to as the repo rate is
the minimum rate at which banks are prepared to lend money
- it acts as the benchmark for other interest rates, including
personal loans and mortgages.
The high street banks' base rate changes following the Bank
of England's signals through its daily money market operations.
The central bank moves base rates by changing the dealing
rates at which it buys bills from the discount houses.
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Borrowing (which sort of credit)
If you decide you want to borrow money, you need to ask yourself
some key questions to help you decide your best course of
action.
- Do you require short term borrowing ?
- If so, is the amount small ?
If the answer to the two questions above is 'yes', you may
be best arranging an overdraft at your bank or borrowing on
your credit card (credit card borrowing is never the cheapest
source of finance, but for short term borrowing, many people
like the convenience).
Do you want to borrow for a longer period, perhaps up to
a year or more ? An overdraft may be useful, or if you have
a 'gold card', you may be able to borrow amounts of up to
£10,000 at a reasonable interest rate. If you have a
life insurance policy, contact the organisation which issued
it - you may find you can borrow money relatively cheaply
by using it as security.
Do you want to borrow for say 1 to 5 years ? If so, consider
a personal loan, borrowing against your life insurance policy
or taking out a second mortgage.
Another aspect to consider is your credit rating. Any bad
debts or county court judgements may affect your ability to
borrow money. [Back to top]
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