Before you borrow money, compare the cost. The difference between a 0% promotional credit card and a payday loan on a $3,000 need can be thousands of dollars in interest. Here are the 10 most common ways to borrow, ranked from cheapest to most expensive.
10 Ways to Borrow Money — Ranked by Cost
| Borrowing Method | Typical APR | Speed | Best For |
|---|---|---|---|
| 0% APR credit card (promo) | 0% (limited time) | Immediate | Planned purchases you can pay off |
| HELOC / Home equity loan | 7–9% | 2–6 weeks | Large expenses, homeowners |
| Federal student loans | 6.5–9% | Per semester | Education costs |
| Credit union personal loan | 8–12% | 3–10 days | Good credit borrowers |
| Bank personal loan | 10–15% | 3–7 days | Existing bank customers |
| Online personal loan | 10–25% | 1–3 days | Fast funding, fair credit |
| 401(k) loan | Prime + 1–2% (~8%) | 7–10 days | Short-term, employed borrowers |
| Credit card (regular) | 20–28% | Immediate | Short-term, paying off monthly |
| Buy Now Pay Later | 0–30% | Immediate | Retail purchases, varies by term |
| Payday loan | 200–400% | Same day | Avoid if possible |
1. 0% APR Credit Card Promotional Offer
Typical cost: 0% for 12–21 months, then 20–28% APR after
If you know you can repay the full amount within the promotional period, a 0% APR credit card is effectively free money. Cards like the Chase Freedom Unlimited or Citi Simplicity offer 0% intro APR on purchases or balance transfers.
Catch: If you don’t pay the full balance before the promo ends, you owe retroactive interest on the remaining balance on some cards. Read the fine print.
Best for: Planned expenses under $10,000 that you can repay within 12–21 months.
2. HELOC or Home Equity Loan
Typical cost: 7.5–9.5% APR (2026, variable for HELOCs)
If you own a home with equity, a HELOC (Home Equity Line of Credit) or home equity loan offers some of the lowest borrowing rates available to individuals. You borrow against the equity you’ve built in your home.
- HELOC: Variable rate line of credit, draw as needed, pay interest only on what you use
- Home equity loan: Fixed rate, lump sum, predictable monthly payments
Risk: Your home is collateral. Missing payments can lead to foreclosure.
Best for: Large planned expenses ($10,000–$100,000+) like home renovation, medical costs, or debt consolidation — for homeowners with at least 15–20% equity.
3. Personal Loan from a Credit Union
Typical cost: 8–12% APR for good credit
Credit unions offer some of the lowest personal loan rates — typically 2–4% below online lenders for the same credit profile. You must be a member to apply, but membership is usually easy to obtain (most only require living in a specific area or working in a certain industry).
Best for: Borrowers with 660+ credit scores who prefer lower rates and aren’t in a rush.
4. Online Personal Loan
Typical cost: 10–25% APR depending on credit
Online lenders (LightStream, SoFi, Upstart, Discover Personal Loans) offer fast approvals (1–3 business days) and compete aggressively on rates for borrowers with good credit. Upstart uses alternative data (education, employment) that can benefit borrowers with thin credit files.
Loan amounts: $1,000–$100,000
Best for: Borrowers who need funds quickly or prefer an all-digital process.
5. 401(k) Loan
Typical cost: Prime rate + 1–2% (approximately 8–9% in 2026) — paid back to yourself
You can borrow up to 50% of your vested 401(k) balance, or $50,000 (whichever is less). The interest you pay goes back into your own account. There is no credit check.
Critical risks:
- If you leave or lose your job, the full loan balance is typically due within 60–90 days
- Missed payments result in the loan being treated as a taxable distribution + 10% early withdrawal penalty
- You miss market growth on the borrowed amount during the loan period
Best for: Short-term borrowing needs with stable employment, as a last resort before tapping high-interest debt.
6. Credit Card (Regular, Not Promo)
Typical cost: 20–28% APR
Charging an expense to a regular credit card and carrying a balance is one of the most expensive forms of borrowing. The average credit card APR hit 21.5% in 2025 and remains elevated in 2026.
Example: Carrying a $3,000 balance at 24% APR for 12 months costs approximately $400 in interest.
Only acceptable for: True emergencies when you have a concrete plan to pay off the balance within 1–2 months.
7. Buy Now Pay Later (BNPL)
Typical cost: 0% (for “pay in 4” plans, no interest) to 30% APR for longer-term plans
BNPL services (Affirm, Klarna, Afterpay) offer split payments — typically 4 payments over 6 weeks at 0% interest. For purchases under $500 that you can repay in 6 weeks, BNPL can be a useful tool. Longer-term BNPL plans (6–24 months) carry interest rates of 15–30%, rivaling credit cards.
Risk: BNPL loans can accumulate quickly across multiple purchases. The CFPB has flagged that multiple simultaneous BNPL plans can cause consumers to lose track of total debt.
8. Payday Loans — Avoid
Typical cost: 300–400% APR
Payday loans are short-term loans (typically $200–$500) due on your next paycheck. The fees are deceptively simple — “$15 per $100 borrowed” — but annualized, that’s 390% APR on a 2-week loan.
If you cannot repay the full amount on your next payday, fees compound rapidly, trapping borrowers in a cycle. The CFPB has issued rules around payday lending, but these loans remain legal in most states.
Alternatives to payday loans: Credit union payday alternative loans (PALs), employer paycheck advances, or negotiating a payment plan with the creditor.
How to Choose the Right Borrowing Option
- How much do you need? Under $1,000 — credit card or BNPL. $1,000–$50,000 — personal loan or HELOC. Over $50,000 — HELOC or home equity loan.
- How fast do you need it? Same day: credit card. 1–3 days: online personal loan. 2–6 weeks: HELOC.
- What’s your credit score? 720+: access best rates. 640–719: compare online lenders. Under 640: credit union, secured loan, or BNPL.
- Do you own a home? If yes, a HELOC is almost always the cheapest option for larger borrowing needs.
The best borrowing decision is the one with the lowest total interest cost that you can comfortably repay on schedule.
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