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What does borrowing actually cost?
'4 easy payments' and 'just the minimum' are designed to feel free. Pick a scenario, set the amount, and see the real total: in pounds, in months, and in what it does to your credit file.
Pick a scenario
Modelling: £120 trainers split into 4 interest-free payments.
True total cost
£120
if every payment lands on time
Time to clear
6 weeks
4 fortnightly payments
Effective cost multiple
1.00×
no interest, as long as nothing slips
What you still owe, over time
hover for exact figures
The quiet costs: missed payments
The one genuinely cheap borrow: your student overdraft
Full repayment schedule
| Payment | Payment | Interest | Balance after |
|---|---|---|---|
| Payment 1 | £30.00 | £0.00 | £90.00 |
| Payment 2 | £30.00 | £0.00 | £60.00 |
| Payment 3 | £30.00 | £0.00 | £30.00 |
| Payment 4 | £30.00 | £0.00 | £0.00 |
Unlock the full month-by-month repayment schedule for this scenario.
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Illustration only, not financial advice. Representative rates: pay-in-4 BNPL at 0%, overdraft at 39.9% EAR repaid at £100/month, card at 24.9% APR with a typical minimum payment. Your provider’s terms will differ.
What this means
The trick behind most consumer credit is separating the buying moment from the paying moment. BNPL genuinely is interest-free when every instalment lands on time. The risk isn’t the price, it’s the stacking. Four purchases across three apps is twelve payment dates to track, and late fees plus a marked credit file turn a free service into an expensive one quickly. BNPL is now regulated by the FCA and reported to credit reference agencies, so it counts, even when it feels like it doesn’t.
Minimum payments are the most expensive setting on a credit card, by design. They’re calculated to barely outrun the interest, which is why a modest balance can take years to clear and cost half as much again. Even a small fixed overpayment (£25 becomes £50) collapses both the timeline and the total, because every extra pound goes straight at the balance rather than the interest.
Overdrafts flipped from cheapest to priciest mainstream borrowing when the FCA capped fees and banks moved to flat rates around 40% EAR. The student exception is the one to use: a 0% arranged student overdraft is a genuinely free buffer while you study. Just diarise its end date: typically one to three years after graduation it converts to a charged account, and that’s the moment to have it cleared or a plan in place.
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