THE best tip about borrowing money is simple: don't!

If you think of it this way, credit cards can add up to 20% interest to your normal expenses, so if you can avoid paying all that money to interest, it would be like getting an extra 20% raise.

There are benefits from credit cards, like extended warrantees, dividend programmes, air miles, purchase protection and establishing a strong credit rating, but the best approach is to make sure you pay your balance in full every month.

Having said that, there are some purchases or situations where you will need to borrow money, and there are always better approaches in how to borrow.

One major tip is to shop around on interest rates.

Banks are often very competitive on rates to get customers, so you may be able to drop an interest rate by a percent or more with the cost of spending a few extra minutes or hours talking with a few more banks.

There are also different ways of approaching loans that may help not only from a financial point of view, but also by streamlining your finances.

For example, if you have a number of loans and credit cards with balances, it may be convenient to arrange for a consolidation loan with the bank.

If you're looking at large purchase or expenses, such as home renovations, another common borrowing approach is to tap into the equity in your home, commonly referred to as a home equity loan or a second mortgage.

Lines of credit are also often used for these larger expenses, and are different from standard loans in that they have more flexibility.

You can draw on them as if they are a bank account, and only pay interest on the outstanding balance.

To get an even better interest rate, you can get a secured line of credit using your home or other assets as collateral - they will help fund larger lines of credit for other larger expenses.