Two alternative debt busters!

We look at two relatively cheap ways to borrow money.

This article was first sent to readers as a 'lovemoney.com' email.

Here at lovemoney.com, we often talk about 0% balance transfer cards and how they can help dig you out of a debt hole.

As repetitive as the message may seem, over the short term there's no beating one, and if you play your cards right, they could save you thousands of pounds in interest.

But what if you're unable to take advantage of one of these deals? Perhaps you've already exhausted all 0% avenues, or your debt is too large to tackle within the 0% period.

In these cases, there are are two other options you can explore: Lifetime balance transfer credit cards, and loans.

Reducing your debt sentence

In Why it pays to be a tart, I worked out that on a £5,000 debt, monthly payments of £115 or less would mean you'd be better off going for a lifetime BT card as opposed to a 0% one.

Lifetime balance transfer cards also give you the peace of mind of being able to shift your debts, and then relax in the knowledge that you'll be paying a low rate of interest no matter how long it takes to pay off the debt.

After all, being a tart requires both discipline and an impeccable credit record - something not all of us have.

So, if you believe that a balance transfer card is for life, and not just for Christmas (I do try), here are the top three lifetime balance transfer cards at the moment:

As you can see, with typical loan rates floating at around 8%, rates for lifetime balance transfer cards undercut rates for personal loans by at least 2%, and are particularly appropriate for transfers under £5,000 where a loan tends to be more expensive.

However, you also have to be aware of some of the snags which come with some of these credit cards.

Unlike loans,lifetime balance transfer cards can come attached with an upfront handling fee. Thankfully, these are usually lower than the 3% you'd expect to pay on a 0% card, but can still be a sting in the tail for what is marketed as a cheap debt solution.

Market-leading MBNA's Rate For Life credit card is a good example, and charges a 1% fee on all transfers made. However, in many cases it is still the cheapest option, and the less you can afford each month, the wiser it will be for you to go for the lower rate and pay the fee.

You can see which option is cheaper for you by punching your figures into this credit card calculator.

Another positive feature of credit cards is you can change your payments to suit your circumstances, and as long as you make the minimum payment each month, you won't be hit by any penalties.

However, the less you pay, the more expensive your debts will become over the long term. So what if you're looking for a more structured payment plan?

The case for loans

Despite the fact we've grown to favour quick fix debt solutions such as 0% cards, the problem is it's all too tempting to just pay the minimum each month.

With personal loans, fixed payments mean you'll know exactly how much is coming out of your account, and when. You'll also have a clear timeline for when your debts will be paid off, which can be a satisfying feeling when you finally become debt free.

Here are the best loan rates on offer at the moment:

The loans listed above are available to everyone, regardless of who you bank with. However, if you are an existing Abbey customer, you can qualify for even better rates.

Abbey's loans aren't tiered like most lenders, so whether you want to borrow £1,000 or £25,000, Abbey's typical APR of 8.9% makes it very competitive when it comes to borrowing smaller amounts.

In addition, yourpersonalloan.co.uk will only consider your application if you are a homeowner. If you don't fall into this category, Sainsbury's personal loan offers a rate of 8.8% on amounts between £5000 to £6,999, and for amounts over £7,500, Alliance and Leicester is the market leader, with a typical rate of 8%.

In saying this, it's important to remember that all rates quoted are 'typical' rates, and won't necessarily be offered to everyone. Tactical applications can help you save both time and money when it comes to getting one.

You also have to remember that unlike a credit card, paying the loan off early will usually mean you'll have to pay a penalty, so loans should be avoided if you're only looking for a quick-fix solution.

Hopefully you've now gained an insight into the pros and cons of lifetime BT cards and loans. Obviously, these won't be for everyone, and if you have the discipline, 0% balance transfer cards will still provide a cheaper solution if you're prepared to tart between them.

The important thing is to do your calculations and weigh up the costs. That way, you should find a long term debt solution to suit both your needs and your wallet.

More: Steer clear of secured loans | The return of the loan arranger