According to the Australian Prudential and Regulation Authority (APRA), Australians owed $58.6 billion in personal loans and $40.8 billion was outstanding on credit cards for the year ending December 2012.
In choosing whether to borrow on a credit card or take out a personal loan both options should be carefully considered in relation to interest rates, repayment options, penalties, fees and charges, according to RateCity spokeswoman Michelle Hutchison.
The publisher of CreditCardFinder.com.au Jeremy Cabral, says that it’s important to assess your repayment ability before choosing between a personal loan and a credit card. Cabral says that lower interest rates on credit card balance transfers can be very attractive if you follow a strict repayment plan.
ANZ Bank branch network district manager Anna Flower, says that the type of purchase often determines whether a personal loan or credit card is better. Ms Flower advises that the crucial consideration is the amount to be borrowed and whether or not you are going to be able to repay it within the introductory period on a credit card, and that for large amounts it’s more sensible to take out a personal loan.