Overdraft

Your bank allows you to temporarily take extra money out of your current account. You are usually expected to pay this money back quickly, and the interest charges can be very expensive. The cost is even higher if you do this without asking the bank first. You could be charged stiff penalties that may add up to hundreds of pounds over a few months. More about overdrafts

Credit card/store card

This is another relatively expensive way to borrow money. You get a card to pay for goods and the card provider sends you a monthly bill; you can clear all or some of the balance, or make the minimum payment. Good for using on holiday, and many credit cards also provide short-term insurance for your purchases. More about credit cards and store cards.

Unsecured loan

Useful if you need to raise a fairly large sum of money. You have to shop around for the best rates and be absolutely certain that you can afford the monthly repayments. If you don't pay up, you can be taken to court, or they might send the debt collectors around. The newer flexible loans may sound like a great idea but watch out - you could end up paying more interest. More about unsecured loans.

Store finance/hire-purchase

A type of credit provided when you purchase a specific item. Hire purchase agreements (HP) mean that you're partly paying off a loan, and partly renting the item. They can take a very long time to pay off, and are often extremely poor value for money. You can end up paying much more than the actual purchase price. Sometimes offered on furniture or cars.

Secured loan

Your home is the 'security' for this type of loan. Although you may get a good rate of interest, if you can't keep up the payments your home can be repossessed by whomever you owe the money to. A mortgage is a common example of a secured loan, where you can end up homeless if you default on the repayments. More about mortgages.

Pawnbroking

You give your jewellery or other possessions to the pawnbroker and they lend you a small amount of money for a few days. You then have to pay the money back to retrieve your goods; otherwise the pawnbroker gets to keep and sell the items. More about pawnbroking.

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Updated: 17/10/2011