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'Be aware of varied lending costs' warns expert

Published: 08/02/2010

With Valentine's Day rapidly approaching, many people may be looking to borrow money in order to surprise their loved one with an engagement ring.

Andrew Hagger of Moneynet.co.uk has compared popular lending arrangements in order to highlight the discrepancies between the best buys and the more expensive options.

Mr Hagger said: "The smartest financing option is to buy the ring on your credit card and apply for a balance transfer card now so you can switch the balance across to an interest free deal when your statement comes through."

He added that while a personal loan is another viable option, the interest on smaller amounts tends to be more expensive this way.

The differences in the price of borrowing money can be substantial as Mr Hagger points out.

A £2,500 loan from the Post Office or First direct comes at a rate of 13.9 per cent APR.

The equivalent from the Halifax Bank of Scotland would be lent at 22.9 per cent, which would mean an additional cost of £200.

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