Best and Safest Ways to Borrow Money

Borrowing can solve a short-term problem or create a long-term one — the difference comes down to the order you try options and how carefully you manage fees and risks. The playbook below puts the lowest-cost, most transparent choices first, then moves toward higher-risk tools you should treat with caution or avoid altogether.

You’ll see where to start (payment plans with your provider, 0% balance transfers with a written payoff plan, fair small-dollar loans from credit unions), how 2025 Buy Now, Pay Later (BNPL) reporting changes the picture, and when “solutions” like payday loans or debt settlement are more likely to make things worse. At the end, you’ll get a 30-day plan to borrow as safely as possible and pay it back without unnecessary penalties.

1) Start Here: Ask Your Creditor or Provider for a Payment Plan

The safest “loan” is the arrangement you make directly with the source of the bill — a medical provider, utility, school, landlord, or even your current credit card issuer. Many organizations offer formal hardship programs or informal payment plans that spread costs with low or no interest. You’ll usually get the best terms the earlier you ask.

Call and briefly explain what changed. Then make a concrete request such as, “Can we split this into six monthly payments with no late fees if I enroll in autopay?” Ask for the agreement in writing so you can refer to exact dates and amounts.

With credit cards, specifically request their hardship program or “loss-mitigation options.” These may include:

• Temporary APR reductions
• Waived late or over-limit fees
• A fixed payment plan designed to pay the balance down

If you’re already behind, ask whether they’ll re-age the account to “current” after several consecutive on-time payments. That can help credit over time.

Keep a simple spreadsheet with due dates, amounts, and contact names so nothing slips. If one representative says, “We don’t do that,” thank them and call again — a different rep or department may have more tools.

As a rule of thumb, try to solve the problem where it started before opening a brand-new account with new fees and risks. If you’re considering debt consolidation instead, compare the total cost across the full payoff period; a lower interest rate can backfire if you stretch payments for many extra years and pay more overall.

2) 0% Balance Transfer: Powerful If You Have a Clear Plan

A 0% intro APR balance transfer for 12–21 months is one of the cheapest ways to “borrow” to eliminate expensive card debt. But it only works if you treat it like a project with an end date, not a new spending limit.

Most cards charge a balance transfer fee of about 3%–5%, so build that into your math instead of pretending the deal is free. A simple approach:

• Add the balance you’re moving and the transfer fee.
• Divide by the number of promo months.
• Autopay that amount every month until the promo ends.

Disable new spending on the transfer card so your progress is visible and you don’t lose the purchase grace period. If the issuer gives you a lower credit limit than you expected, transfer only what you can retire inside the promo window and keep paying down the rest where it is.

Watch for common gotchas:

• Missing a payment can forfeit the promo and trigger a much higher APR.
• Cash advances usually accrue interest immediately and are not covered by the promo rate.
• Maxing out a single line can spike utilization and nudge your credit score down temporarily.

Put the promo end date — and a reminder 60 days earlier — on your calendar. When the balance hits zero, don’t let the freed cash disappear into daily spending. Redirect that same autopay amount into savings or toward another high-interest debt.

3) Credit Union Personal Loans (Including PALs): Fair Small-Dollar Credit

Credit unions are member-owned and often price small personal loans more fairly than many online or high-cost lenders. That makes them an excellent next stop if a provider payment plan or balance transfer won’t fully solve the problem.

Ask specifically about:

• Standard personal loans: fixed-rate installment loans you can use to consolidate higher-rate card balances.
• Payday Alternative Loans (PALs): small, short-term loans at regulated, lower costs designed as safer substitutes for payday loans.

Request an all-in APR quote, not just the nominal rate, so origination and any monthly fees are reflected in a single number. Ask whether you can earn a rate discount by setting up direct deposit or autopay.

Keep the term as short as you can while keeping your cash flow stable. Stretching an inexpensive loan too long can increase total interest significantly, even if the monthly payment looks attractive.

If you’re rebuilding credit, on-time payments on a credit union loan can help you establish positive history. Many credit unions report to all three major credit bureaus. Compare at least:

• Two local credit unions, and
• One community bank or reputable online lender

so you see real differences in pricing and terms. If you don’t qualify today, ask which specific factor blocked approval (such as debt-to-income ratio, credit score, or short history) and what target would change the answer. Put a reminder on your calendar to revisit once you’ve improved those factors.

4) BNPL (Buy Now, Pay Later): More Visible in 2025 — Use Sparingly

BNPL can help spread the cost of a planned purchase, but it’s still credit. Stacking multiple BNPL plans can quietly strain your monthly budget, especially when several due dates hit at once.

In 2025, several BNPL providers furnish data to credit bureaus, and the infrastructure for point-of-sale loans is expanding. Even if many scoring models don’t fully count BNPL yet, late payments and collections are treated like any other derogatory item.

To use BNPL safely:

• Treat each plan like a short installment loan with a fixed payoff date.
• Limit yourself to one BNPL plan at a time.
• Avoid BNPL for consumables or subscriptions, where it’s easy to over-commit.

Before you click “pay in 4,” confirm:

• Exact due dates and total number of payments
• Whether autopay is required or optional
• What happens after a failed payment or expired card
• Late fee policies and whether fees can compound

If you return an item, track the merchant’s refund timeline and the BNPL provider’s rules for adjusting or canceling the plan. Otherwise, you could keep paying for something you no longer own.

The moment you check out, add BNPL due dates to your calendar and confirm email or app notifications are turned on. If you’re already juggling multiple plans, stop taking new ones until the oldest is fully paid. Then rebuild a small “planned purchases” savings fund so you’re less tempted to finance everyday items.

5) HELOC and Home Equity Loans: Cheaper Money, But Your House Is on the Line

Home equity loans (HELs) and home equity lines of credit (HELOCs) often carry lower APRs because they’re secured by your property. That can make them appealing for larger, predictable expenses such as major renovations or consolidating high-rate card debt.

The tradeoff is serious: your house is collateral. Missed payments can lead to foreclosure, and HELOC rates are typically variable, so your payment can increase when market rates do.

Before using home equity:

• Run a “worst-case” test: what if your rate climbs 2 percentage points? Would the new payment still fit your budget?
• Consider whether your income could handle a temporary dip (for example, a few months of reduced hours) without missing payments.
• Compare the value added by renovations with the total borrowing cost so you’re not just moving expenses around.

If you plan to use equity to pay off credit cards, combine the loan with behavior changes:

• Set a 90-day spending freeze on the cards you’ve just paid off.
• Close or reduce limits on cards you routinely max out.
• Automate the new home-equity payment as soon as funds disburse.

Read the Truth-in-Lending disclosures carefully for:

• Margin and index (how your variable rate is set)
• Rate caps (per year and lifetime)
• Draw period vs. repayment period
• Closing costs, annual fees, and prepayment rules

If you only need funds once, a fixed-rate HEL may be simpler than a revolving HELOC. Keep emergency savings separate so you’re not forced to draw more from the line just to handle repairs or unexpected bills.

6) 401(k) Loans: Last-Resort “Bank of You” With Real Tradeoffs

A 401(k) loan feels reassuring because you’re “borrowing from yourself,” but the tradeoffs deserve a careful look. Most plans let you borrow up to the lesser of 50% of your vested balance or $50,000. Repayment is usually limited to five years unless the loan is for a primary residence.

Key risks include:

• If you leave your employer with a balance, it can be treated as a deemed distribution, which may be taxable and subject to penalties.
• You miss market growth on the borrowed amount while it’s out of the account.
• Loan payments are made with after-tax dollars, and withdrawals in retirement may be taxed again.

If you do take a 401(k) loan:

• Use it only after you’ve exhausted safer options such as payment plans, balance transfers, and fair personal loans.
• Keep the term as short as you can reasonably handle.
• Set up automatic payroll deductions so payments are consistent.

Avoid borrowing from your 401(k) just to move high-interest debt if you haven’t already fixed the spending pattern that created those balances. Otherwise you risk ending up with both the retirement loan and new card debt.

7) In a Debt Emergency: Skip “Debt Settlement,” Consider NFCC and DMPs First

“Debt settlement” marketing often promises big reductions, but most for-profit programs require you to stop paying while they negotiate. During that time:

• Late fees and penalty interest accumulate on unsettled accounts.
• Collections calls intensify and lawsuits become more likely.
• Your credit reports fill with serious negative marks that can last for years.

A safer first stop in a genuine emergency is nonprofit credit counseling through an agency affiliated with the National Foundation for Credit Counseling (NFCC) or a similar network. If appropriate, a counselor may recommend a Debt Management Plan (DMP):

• You make one monthly payment to the agency.
• They distribute funds to participating creditors.
• Creditors often reduce APRs and waive some fees.
• The plan typically targets full payoff in 3–5 years.

Before you sign any contract — whether with a counselor, lender, or settlement company — compare:

• Total expected fees
• Timeline to debt-free
• How progress will be reported on your credit

If your situation is mainly high-rate cards with steady income, a DMP is usually simpler and safer than settlement. If unemployment or medical hardship is the root cause, ask each original creditor about their hardship options in parallel with counseling.

If a settlement firm claims “guaranteed” results, demands upfront fees, or tells you to stop paying creditors just to create “leverage,” treat that as a red flag and walk away.

What to Avoid if You Want the Safest Borrowing Path

Some products are consistently risky and expensive, especially when better alternatives exist:

• Payday loans: a typical two-week loan charging $15 per $100 borrowed equates to an APR around 391%. Rollovers trap many borrowers in long cycles of debt.
• Auto title loans: similar costs to payday loans, plus the risk of losing your vehicle if you fall behind. Single-payment title loans often end in repossession.
• Most “debt settlement” schemes: high fees, stalled payments, credit damage, and tax issues, with no guarantee that enough debts will settle to leave you better off.
• Repeat overdrafts and high-fee cash-advance apps: small amounts and per-use charges add up quickly and can be more expensive than they look.

If you need quick small-dollar funds, try:

• A PAL from a credit union, and/or
• A hardship or payment plan with your creditor

before touching high-cost short-term products. If a pitch sounds like easy money with no real trade-offs, slow down — legitimate options explain both benefits and risks in writing.

30-Day Borrowing Plan: Minimize Risk, Minimize Cost

Use this 30-day roadmap to put the ideas above into action.

Days 1–3: Call creditors and providers (utilities, medical offices, landlord, card issuers) to request hardship or payment plans. Get all agreements in writing and add due dates to your calendar or budgeting app.

Days 4–7: If card debt is the main issue, price a 0% balance transfer. Include the 3%–5% transfer fee in your calculations. Divide the total balance by the promo months and set “autopay to zero” at that amount.

Days 8–10: Compare a credit union personal loan or PAL. Choose the shortest term you can safely afford. Enroll in autopay and ask about any rate discounts for doing so.

Days 11–15: If you’re using BNPL, limit yourself to one open plan at a time. Add all due dates to your calendar and avoid using BNPL for subscriptions or everyday consumables.

Days 16–20: For larger needs, evaluate HEL/HELOC options and run a worst-case payment test. If you use home equity to consolidate debt, implement a 90-day spending freeze on your cards and avoid rebuilding balances.

Days 21–30: If the situation is severe or you’re overwhelmed, schedule a session with a nonprofit credit counselor and evaluate a DMP instead of settlement. Update your spreadsheet, reminders, and automatic payments so the next month starts with a more organized plan.