TSB borrowers will be able to take out short-term loans from the bank in future, as it plans to offer an alternative to payday lenders, loan sharks, and overdrafts.
The bank has revealed it's looking to launch a set of new shorter-term personal loans to help those with cash flow problems.
It's yet to divulge what rates and lengths people will be able to borrow for or when exactly the new deals will launch, but it says these will be targeted at working families and those with varying incomes.
The bank says it wants to fill the gap where borrowers feel they have no other alternative but to take out pricier types of credit.
It currently offers personal loans of between £7,500 to £25,000 for those borrowing between one and five years at a competitive rate of 2.9 per cent, which was this week reduced from 3.2 per cent.
So it's likely it's new range will be on loans of less than a year that are for under £7,500.
How to get out of debt
RECORD numbers of Brits are seeking help to manage their debt.
While getting back on track can seem like a daunting task, we've taken a look at what you can do to help you on the way.
Get help for free: There are lots of groups who can help you with your debts.
Don't ignore bills: Ignoring your bills won't make them go away, as tempting as it may be, and the problem will likely escalate. It's best to tackle debt head on by working out exactly what you owe and when you need to pay it back.
Make a budget: Once you know what you need to pay back, it'll become easier to prioritise your finances. The next step is to create a detailed budget so you can see how much you have going in and going out. Use an online tool like one from Citizens Advice to help you do this.
Switch and save: Households can save hundreds of pounds by checking if they can get a cheaper deal elsewhere. In fact, MoneySavingExpert says families can save £330 on average by switching from Standard Variable Tariffs (SVTs) to a better rate. Use a comparison site like MoneySuperMarket or Energyhelpline to see what deals are available.
Get a balance transfer card: If you're paying interest on your credit card balance, this can ultimately add to your debt pile. A better option could be getting a 0 per cent balance transfer card. These types of card will let you transfer an existing balance to a new card and gives you the chance to clear it fully without incurring interest. MoneySavingExpert's eligibility calculator will let you know what deals you will likely qualify for. You'll need to have a good credit rating to qualify for one.
See if you're entitled to benefits: It's important to check if you're entitled to any extra benefits or tax credits if you're struggling financially. Citizens Advice can help you see what help is available and there's a benefits calculator on the Gov.uk website. Help ranges from tax credits, job seeker's allowance and universal credit.
Also consider: You can find information about Debt Management Plans (DMP) and Individual Voluntary Arrangements (IVA) on the Money Advice Service website and on the Government's Gov.uk site. But make sure you know exactly what you're signing up to as these plans aren't suitable for everyone. Many firms charge a fee for the service, either upfront or one that's incorporated into your monthly payments.
When it comes to the current best buys under £7,500, Cahoot and Santander offer the cheapest loan at 13.5 per cent rate on borrowing of £1,000 to £1,999.
Meanwhile, Ikano charges 13.4 per cent on £2,000 to £2,999, and Admiral sets rates at 8.2 per cent for £3,000 to £4,999.
Admiral is also cheapest for loans of between £5,000 and £7,499, charging 3.4 per cent, according to MoneySavingExpert.com.
Of course, the rate you get varies depending on how much you borrow and on your credit history, and only 51 per cent of applicants have to be offered the advertised rate.
So use an eligibility checking tool, such as MoneySavingExpert.com's, to check your likelihood of being accepted first without it hitting your credit score.
In comparison, short-term lender Amigo charges 49.9 per cent on loans of between £1,000 and £10,000 over 12 and 60 months, while payday lenders have been known to charge more than 1,000 per cent.
If you only need a small amount of cash in the short-term, you may be better off taking out a an interest-free credit card as long as you're sure you can repay the debt before the 0 per cent period ends.
Of course, the problem is that often personal loans and credit cards can only be taken out by those with decent credit scores, leaving others turning to pricier alternatives.
A TSB spokesperson said: “Customers have told us they want more help managing short-term cash flow problems, and they want a bank that provides better options when borrowing for shorter periods.
"That’s why we’ve recently reduced our headline rate on unsecured personal loans to 2.9 per cent APR, and why we’re offering month-long payment holidays for customers with personal loans.
"We’re currently in the process of developing short term lending products to better serve our customer’s needs.”
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It comes as banks up rates from April 6 to up to 49.9 per cent.