To borrow more money than i actually need just for a low interest rate?

[Oopsiedaisyy]

Gone a bit mad on the family holiday spending and will have a nasty £3kish credit card bill. Figured I'd rather use a personal loan rather than incur high interest on a credit card while i pay it off...

But loans that small have high interest rates, same as a credit card.

But if i borrow 7k, id pay 3.4%. Should i borrow 7, pay off the 3 over x number of months and then simply pay off the loan in one go, hiding it in my savings account. Id pay much less interest?

Would you definitely get the 3.4%, ie have you had an application accepted accepted at that rate, or are you just going by a "headline" rate for loans of 7000 to 10000? You may well find your actual interest rate is considerably higher.

In your position I'd be more looking at a balance transfer card with a long 0% offer.

That's a good idea!

A friend of mine tried to pay off a car loan early but found that the interest was all added to the loan at the beginning so it made zero difference.

Given you've already overspent on the holiday this could be a terrible idea.

Do you have the willpower not to dip into the rest or will it start a cycle of debt?

If you have decent credit rating a balance transfer makes far more sense. But you need to be disciplined about paying it off

0% credit card makes more sense. The fee for balance transfer shoundt be too much, or you could use your current account funds/next paychecks to pay down the old credit card and put usual spends on a new 0% one until that balances out and you've built up your current account again.

o% credit card deals are still available so I would go for that. No way would I be looking at a personal loan never mind a higher one than the debt when there is still interest free credit available

0% CC or see what the fee is for OD, sometimes they'll offer an interest free one.