If you've blown the budget in the sun, you might now be struggling with an overdraft, payday loan or a high-interest credit card, especially if you've taken a financial hit at the start of the new school term.
It's important to tackle any borrowings as soon as possible, preferably before the tan fades. If not, you could end up in a downward debt spiral. The average debt in Scotland is £2353 and almost one in four borrowers (24%) thinks it will take at least three years to pay off the money. Some 7% of these predict they will never be debt-free.
A credit card that charges 0% on balance transfers can be a good way forward. Let's say you took your standard credit card abroad and ran up a debt of £3000 at the typical interest rate of 18.9%. If it took you two years to clear the debt, you would pay total interest of about £626.
But if you switched your outstanding balance to the Barclaycard Platinum Balance Transfer card you could pay no interest for 28 months, the longest interest-free balance transfer period on the market. So, if you paid off your debt after two years, it would cost nothing in interest.
There is, however, a balance transfer fee of 3.5%. In other words, you would pay £105 to switch the debt, bringing the total saving down to £521. Barclaycard also offers a 0% balance-transfer deal for 27 months with a fee of 2.69%, so to switch a debt of £3000 costs £81. A number of other card issuers charge 0% on balance transfers for 27 months, but the fees are higher. NatWest, for example, levies a fee of 2.99%, while you would pay 3.15% to switch a balance to the Tesco card.
If you're prepared to settle for a shorter interest-free period, you can pay a smaller fee. The Lloyds TSB Platinum, for example, charges 0% for 15 months with a balance transfer fee of 0.8%. Or there's the RBS Platinum card, again with 0% for 15 months but a slightly higher fee of 0.9%.
A balance transfer card works best if you can pay off the debt within the interest-free period. If not, you will start to rack up interest at a higher rate. Barclaycard, for example, charges a standard rate of 18.9%. And try not to spend on the card as you will only add to your debts, especially as most 0% balance transfer cards do not also charge 0% on purchases.
Matt Saunders, Gocompare.com's credit card expert, says a repayment plan is essential to clear the debt on time, adding: "Always pay at least the minimum repayment, as providers will often remove any special 0% introductory offers if you fail to do this."
If you want to avoid the temptation to spend, or if you need a longer period to clear your debts, a personal loan is an alternative.
Personal loans allow you to borrow a set amount over an agreed term, usually at a fixed rate of interest. You could therefore take out a loan for, say, £5000, and pay off your other debts. As long as the rate of interest on the loan is lower, you will be quids in.
Sainsbury's Bank charges 6.8% if you borrow £5000 over three years. The total cost of credit is therefore £524.56. However, you must have used a Nectar Card in Sainsbury's during the past six months to qualify. Santander also charges 6.8% on its online personal loan. Alternatively, you would pay 7% at Tesco Bank and 7.1% at M&S Bank.
Generally speaking, the bigger the loan amount, the lower the rate of interest. However, you should only take out a loan if you are confident you can pay the money back. Watch out for early repayment fees, too.
Many banks and building societies have tightened their lending criteria over the past few years, so you might find it difficult to borrow money at the keenest rates on a credit card or personal loan unless you have a clean credit record.
If you application is turned down, it might be a good idea to check your credit file is up-to-date. Remember too that you leave a footprint when you apply for credit, with some exceptions such as Nationwide, and lenders are wary of customers who make multiple applications.