Article:

Looking for a smart way to earn extra money with minimal risk? One strategy savvy savers use is taking advantage of 0% interest loans and high-yield ISAs (Individual Savings Accounts) to earn what’s essentially “free money.” Here’s how it works.

Step 1: Borrow Money at 0% Interest

Some banks and lenders offer 0% APR loans or credit cards for a set period, typically 12 months. This means you can borrow money without paying interest during that time—perfect for a temporary cash boost.

Step 2: Deposit the Money in a High-Yield ISA

Once you have the funds, deposit them into a high-yield ISA, where your money can earn interest tax-free. Current UK ISAs can offer competitive rates, meaning your money grows while you pay nothing in interest on the loan.

Step 3: Earn Interest Over Time

During the 12-month period, the interest earned in your ISA is yours to keep. Because the loan has no interest, the amount you earn is effectively profit.

Step 4: Repay the Loan

At the end of the 0% period, repay the original loan. Make sure to have a plan in place to avoid any late fees or interest charges if repayment is delayed.

Important Considerations

• ISA limits: The annual contribution limit is £20,000 (for 2025/26).
• Loan fees: Watch out for setup fees or hidden charges.
• Access to funds: Ensure you can access the ISA balance to repay the loan.
• Responsible borrowing: Only borrow what you can confidently repay to avoid financial risk.

Bottom Line

Using a 0% loan combined with a high-yield ISA can be a clever, low-risk way to earn extra interest. While the gains are limited by ISA contribution caps and fees, disciplined planning can turn this strategy into a small but effective boost to your savings.