Change is on the cards for credit fees

Phoebe Huybers and shopper Emily Amerio. Picture: Glenn Barnes Source: National Features

ABOUT 90 per cent of credit cards on the market attract annual fees and some users are forking out up to $700 a year.

An analysis for Your Money by comparison website RateCity has found there are 224 credit cards on the market and only 27 of those escape annual fees.

Those with fees range greatly in cost, from as little as $10 a year up to $700.

In recent years, Australians have become far more diligent in curbing their credit card debt - the nation's plastic bill now is $48.7 billion compared with $49.1 billion at the same time last year.

But RateCity spokeswoman Michelle Hutchison says many plastic users could escape annual fees by shopping around for a better deal.

"Most cards do charge an annual fee but there are plenty of cards on the market that don't," she says.

"For cards that have no annual fee, they are generally a little bit higher in purchase rates compared to the ones that charge.

"You can get the lower rates with an annual fee but if you pay off the card each month there's no point paying an annual fee."

The average credit card interest rate is about 17 per cent.

Emily Amerio, 25, pays an annual fee of about $60 on her card and is looking to switch to a no-fee card.

"I use my credit card for points and I pay it off straight away, otherwise I get hit with high interest," she says.

"It's worthwhile to have a lower interest rate and I will look at switching."

MoneySmart senior executive Robert Drake says the best approach to credit cards is to keep it "cheap and simple".

"Have a credit card that doesn't cost you very much, don't spend a lot on it and pay it off each month," he says.

Drake says the biggest danger with getting into credit card debt is by thinking "if I spend $2000 on my credit card then I'll get these benefits or frequent flyer points".

View the original article here

Change is on the cards for credit fees

Phoebe Huybers and shopper Emily Amerio. Picture: Glenn Barnes Source: National Features

ABOUT 90 per cent of credit cards on the market attract annual fees and some users are forking out up to $700 a year.

An analysis for Your Money by comparison website RateCity has found there are 224 credit cards on the market and only 27 of those escape annual fees.

Those with fees range greatly in cost, from as little as $10 a year up to $700.

In recent years, Australians have become far more diligent in curbing their credit card debt - the nation's plastic bill now is $48.7 billion compared with $49.1 billion at the same time last year.

But RateCity spokeswoman Michelle Hutchison says many plastic users could escape annual fees by shopping around for a better deal.

"Most cards do charge an annual fee but there are plenty of cards on the market that don't," she says.

"For cards that have no annual fee, they are generally a little bit higher in purchase rates compared to the ones that charge.

"You can get the lower rates with an annual fee but if you pay off the card each month there's no point paying an annual fee."

The average credit card interest rate is about 17 per cent.

Emily Amerio, 25, pays an annual fee of about $60 on her card and is looking to switch to a no-fee card.

"I use my credit card for points and I pay it off straight away, otherwise I get hit with high interest," she says.

"It's worthwhile to have a lower interest rate and I will look at switching."

MoneySmart senior executive Robert Drake says the best approach to credit cards is to keep it "cheap and simple".

"Have a credit card that doesn't cost you very much, don't spend a lot on it and pay it off each month," he says.

Drake says the biggest danger with getting into credit card debt is by thinking "if I spend $2000 on my credit card then I'll get these benefits or frequent flyer points".

View the original article here

Change is on the cards for credit fees

Phoebe Huybers and shopper Emily Amerio. Picture: Glenn Barnes Source: National Features

ABOUT 90 per cent of credit cards on the market attract annual fees and some users are forking out up to $700 a year.

An analysis for Your Money by comparison website RateCity has found there are 224 credit cards on the market and only 27 of those escape annual fees.

Those with fees range greatly in cost, from as little as $10 a year up to $700.

In recent years, Australians have become far more diligent in curbing their credit card debt - the nation's plastic bill now is $48.7 billion compared with $49.1 billion at the same time last year.

But RateCity spokeswoman Michelle Hutchison says many plastic users could escape annual fees by shopping around for a better deal.

"Most cards do charge an annual fee but there are plenty of cards on the market that don't," she says.

"For cards that have no annual fee, they are generally a little bit higher in purchase rates compared to the ones that charge.

"You can get the lower rates with an annual fee but if you pay off the card each month there's no point paying an annual fee."

The average credit card interest rate is about 17 per cent.

Emily Amerio, 25, pays an annual fee of about $60 on her card and is looking to switch to a no-fee card.

"I use my credit card for points and I pay it off straight away, otherwise I get hit with high interest," she says.

"It's worthwhile to have a lower interest rate and I will look at switching."

MoneySmart senior executive Robert Drake says the best approach to credit cards is to keep it "cheap and simple".

"Have a credit card that doesn't cost you very much, don't spend a lot on it and pay it off each month," he says.

Drake says the biggest danger with getting into credit card debt is by thinking "if I spend $2000 on my credit card then I'll get these benefits or frequent flyer points".

View the original article here

Change is on the cards for credit fees

Phoebe Huybers and shopper Emily Amerio. Picture: Glenn Barnes Source: National Features

ABOUT 90 per cent of credit cards on the market attract annual fees and some users are forking out up to $700 a year.

An analysis for Your Money by comparison website RateCity has found there are 224 credit cards on the market and only 27 of those escape annual fees.

Those with fees range greatly in cost, from as little as $10 a year up to $700.

In recent years, Australians have become far more diligent in curbing their credit card debt - the nation's plastic bill now is $48.7 billion compared with $49.1 billion at the same time last year.

But RateCity spokeswoman Michelle Hutchison says many plastic users could escape annual fees by shopping around for a better deal.

"Most cards do charge an annual fee but there are plenty of cards on the market that don't," she says.

"For cards that have no annual fee, they are generally a little bit higher in purchase rates compared to the ones that charge.

"You can get the lower rates with an annual fee but if you pay off the card each month there's no point paying an annual fee."

The average credit card interest rate is about 17 per cent.

Emily Amerio, 25, pays an annual fee of about $60 on her card and is looking to switch to a no-fee card.

"I use my credit card for points and I pay it off straight away, otherwise I get hit with high interest," she says.

"It's worthwhile to have a lower interest rate and I will look at switching."

MoneySmart senior executive Robert Drake says the best approach to credit cards is to keep it "cheap and simple".

"Have a credit card that doesn't cost you very much, don't spend a lot on it and pay it off each month," he says.

Drake says the biggest danger with getting into credit card debt is by thinking "if I spend $2000 on my credit card then I'll get these benefits or frequent flyer points".

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here

Credit card or personal loan? How to choose

Personal loans are cheaper but credit cards are more flexible. Source: National Features

PLASTIC fantastic or personal loan - the debate over which is the best way to borrow has never been greater.

Credit cards are quick and easy to use but their popularity is waning. Personal loans are less flexible but often cheaper.

The best choice depends on what you plan to spend the money on and your personal discipline when it comes to making repayments.

And spend, we do. Australians currently have almost $100 billion debt stacked up on credit cards and personal loans.

"There are pros and cons to both credit cards and personal loans," RateCity spokeswoman Michelle Hutchison says.

"They can be useful ways of accessing money and they have different features that can suit different circumstances.

"For instance, credit cards are more of a line of credit-style account when you access money as you need it. While personal loans are often provided as one lump sum to pay for a particular purchase."

Both types of borrowing have a downside.

These may include penalties and fees, and they need to be handled with caution.

According to the Australian Prudential and Regulation Authority, at December 2012 personal loans totalled $58.6 billion and $40.8 billion was outstanding on credit cards.Hutchison says lenders are charging interest rates at an average of 13 per cent for personal loans and 17 per cent for credit cards.

> Count the cost

Credit union Community CPS Australia chief financial officer Wayne Matters says personal loans often have a lower interest rate than credit cards and their repayment schedule usually means the debt is eventually fully repaid.

"The key difference between credit cards and personal loans is that loans are cheaper in the long run and impose greater strictness, with repayments that will result in clearing the debt within the agreed time frame," Matters says.

"Temptation to keep spending is also limited as only a few loans offer redraw options.

"So for larger, one-off purchases such as furnishing a new home, minor home improvement or taking an overseas holiday, a personal loan can be a very effective option.

"In contrast, credit cards are a convenient form of credit that allow immediate spending.

"A decision to use credit cards should be based on whether you have the cash flow to repay the amount quickly and whether you are likely to keep spending and go further in to debt."

> Consolidating debt

CreditCardFinder.com.au publisher Jeremy Cabral says the best option when consolidating debts is to consider your repayment ability before making a decision between a personal loan or credit card.

"If you are looking to consolidate debt and you have a strict repayment plan that you will follow, it is possible to get a lower interest rate with a credit card balance transfer," he says.

"However, if you are looking for a 'set and forget' option for a large debt, that will take a number of years to repay, a personal loan is worth considering instead."

> Be disciplined

Anna Flower, district manager for ANZ's branch network, says people who opt for a credit card should try to pay more than their monthly minimum repayment or pay the balance in full each month to avoid fees and interest.

"Some personal loans allow you to make extra repayments to help you pay off your loan faster and save you interest," she says.

"But you need to be disciplined as you often have the ability to redraw your extra repayments, which can reduce the amount of interest you save in the long run.

"Always make regular repayments and consider setting up a direct debit."

> Type of purchase

The type of purchase is often the key to whether a credit card or personal loan will work best.

"The key factor is the amount of the purchase and whether or not you are going to be able to repay the amount within the introductory period on a credit card - the larger the purchase, the more sensible it is to consider a personal loan," Cabral says.

Credit cards are more convenient for retail purchases as they can be used immediately and over the counter. A personal loan facility has to be set up in advance.

However, for larger items, personal loans are often better.

View the original article here

Credit card debt: from 'revolver' to 'transactor'

Credit Card Users Luke Sands and Marta Sliwinska use different approaches to avoid debt. Picture: Philip Norrish Source: National Features

PLASTIC users are a divided bunch. In banking terms, they are usually split into one of two groups: either "transactors" or "revolvers".

The latter is a financial institution's preferred customer, with these cardholders only making minimum monthly repayments on their bill and, consequently, paying hefty amounts in interest.

NAB's acting general manager of cards and personal loans, David Berry, says the majority of credit card users do manage to pay off their card before interest hits.

"Approximately 55 per cent of our customers pay their account off in full every month," he says.

"Customers who have a large revolving balance on their credit card should move to a low-rate card."

Transactors are certainly the savvy ones -  they use credit cards to their advantage and avoid interest by paying off their bill in full each month.

Luke Sands, 24, says he has a credit card with a $1000 limit and pays it off in full each month, while Marta Sliwinska, also 24, says she doesn't always manage to pay her card off.

"I try to pay it off in full, sometimes for a larger purchase I leave some of it on there and then pay it off," Sliwinska says.

"I probably use my card about five times a month."

Many credit cards on the market have high interest charges - some more than 20 per cent  - so users are badly hit if they can't pay off their debt each month.

And the customers paying these amounts are the ones who prop up the credit card system and allow the banks to make healthy profits.

ME Bank's acting head of cards, Iain Turnbull, says the two types of card users are worlds apart.

And, he says, it can be difficult to move from being a revolver to a transactor.

"There's some behavioural things you can do but it comes down to the level of balance that you are carrying to work out how difficult it is," he says.

"In the extreme we are helping people through hardship, consolidating debts and moving it to the lowest interest rate, whether that's a home loan, personal loan or cheaper credit card."

It's no secret the nation's appetite for credit has softened and Turnbull says plastic growth has been around 1.9 per cent since 2009, compared with 8 per cent in 2006.

Comparison website's RateCity spokeswoman Michelle Hutchison also says there are ways to jump from being a revolver to a transactor.

"There are definitely strategies that credit card users take to move from a revolver to a transactor and everybody should aim to be a transactor as opposed to a revolver because (otherwise) you will be paying interest forever," she says.

"Look at your budgeting  - you're obviously spending more than you are earning."

When choosing a credit card, consumers should look closely at the fees, if indeed there are any, that are associated with the card.

Many card users will be familiar with annual fees but these can easily be avoided as many cards don't have this charge. Credit card reforms last year also resulted in a multitude of changes for plastic users, with new cards taken out after July 1 forcing providers to direct repayments to the most expensive part of the debt first to reduce the amount owing faster.

You will also be asked to nominate your own credit limit.

View the original article here

Credit card debt: from 'revolver' to 'transactor'

Credit Card Users Luke Sands and Marta Sliwinska use different approaches to avoid debt. Picture: Philip Norrish Source: National Features

PLASTIC users are a divided bunch. In banking terms, they are usually split into one of two groups: either "transactors" or "revolvers".

The latter is a financial institution's preferred customer, with these cardholders only making minimum monthly repayments on their bill and, consequently, paying hefty amounts in interest.

NAB's acting general manager of cards and personal loans, David Berry, says the majority of credit card users do manage to pay off their card before interest hits.

"Approximately 55 per cent of our customers pay their account off in full every month," he says.

"Customers who have a large revolving balance on their credit card should move to a low-rate card."

Transactors are certainly the savvy ones -  they use credit cards to their advantage and avoid interest by paying off their bill in full each month.

Luke Sands, 24, says he has a credit card with a $1000 limit and pays it off in full each month, while Marta Sliwinska, also 24, says she doesn't always manage to pay her card off.

"I try to pay it off in full, sometimes for a larger purchase I leave some of it on there and then pay it off," Sliwinska says.

"I probably use my card about five times a month."

Many credit cards on the market have high interest charges - some more than 20 per cent  - so users are badly hit if they can't pay off their debt each month.

And the customers paying these amounts are the ones who prop up the credit card system and allow the banks to make healthy profits.

ME Bank's acting head of cards, Iain Turnbull, says the two types of card users are worlds apart.

And, he says, it can be difficult to move from being a revolver to a transactor.

"There's some behavioural things you can do but it comes down to the level of balance that you are carrying to work out how difficult it is," he says.

"In the extreme we are helping people through hardship, consolidating debts and moving it to the lowest interest rate, whether that's a home loan, personal loan or cheaper credit card."

It's no secret the nation's appetite for credit has softened and Turnbull says plastic growth has been around 1.9 per cent since 2009, compared with 8 per cent in 2006.

Comparison website's RateCity spokeswoman Michelle Hutchison also says there are ways to jump from being a revolver to a transactor.

"There are definitely strategies that credit card users take to move from a revolver to a transactor and everybody should aim to be a transactor as opposed to a revolver because (otherwise) you will be paying interest forever," she says.

"Look at your budgeting  - you're obviously spending more than you are earning."

When choosing a credit card, consumers should look closely at the fees, if indeed there are any, that are associated with the card.

Many card users will be familiar with annual fees but these can easily be avoided as many cards don't have this charge. Credit card reforms last year also resulted in a multitude of changes for plastic users, with new cards taken out after July 1 forcing providers to direct repayments to the most expensive part of the debt first to reduce the amount owing faster.

You will also be asked to nominate your own credit limit.

View the original article here

Credit card debt: from 'revolver' to 'transactor'

Credit Card Users Luke Sands and Marta Sliwinska use different approaches to avoid debt. Picture: Philip Norrish Source: National Features

PLASTIC users are a divided bunch. In banking terms, they are usually split into one of two groups: either "transactors" or "revolvers".

The latter is a financial institution's preferred customer, with these cardholders only making minimum monthly repayments on their bill and, consequently, paying hefty amounts in interest.

NAB's acting general manager of cards and personal loans, David Berry, says the majority of credit card users do manage to pay off their card before interest hits.

"Approximately 55 per cent of our customers pay their account off in full every month," he says.

"Customers who have a large revolving balance on their credit card should move to a low-rate card."

Transactors are certainly the savvy ones -  they use credit cards to their advantage and avoid interest by paying off their bill in full each month.

Luke Sands, 24, says he has a credit card with a $1000 limit and pays it off in full each month, while Marta Sliwinska, also 24, says she doesn't always manage to pay her card off.

"I try to pay it off in full, sometimes for a larger purchase I leave some of it on there and then pay it off," Sliwinska says.

"I probably use my card about five times a month."

Many credit cards on the market have high interest charges - some more than 20 per cent  - so users are badly hit if they can't pay off their debt each month.

And the customers paying these amounts are the ones who prop up the credit card system and allow the banks to make healthy profits.

ME Bank's acting head of cards, Iain Turnbull, says the two types of card users are worlds apart.

And, he says, it can be difficult to move from being a revolver to a transactor.

"There's some behavioural things you can do but it comes down to the level of balance that you are carrying to work out how difficult it is," he says.

"In the extreme we are helping people through hardship, consolidating debts and moving it to the lowest interest rate, whether that's a home loan, personal loan or cheaper credit card."

It's no secret the nation's appetite for credit has softened and Turnbull says plastic growth has been around 1.9 per cent since 2009, compared with 8 per cent in 2006.

Comparison website's RateCity spokeswoman Michelle Hutchison also says there are ways to jump from being a revolver to a transactor.

"There are definitely strategies that credit card users take to move from a revolver to a transactor and everybody should aim to be a transactor as opposed to a revolver because (otherwise) you will be paying interest forever," she says.

"Look at your budgeting  - you're obviously spending more than you are earning."

When choosing a credit card, consumers should look closely at the fees, if indeed there are any, that are associated with the card.

Many card users will be familiar with annual fees but these can easily be avoided as many cards don't have this charge. Credit card reforms last year also resulted in a multitude of changes for plastic users, with new cards taken out after July 1 forcing providers to direct repayments to the most expensive part of the debt first to reduce the amount owing faster.

You will also be asked to nominate your own credit limit.

View the original article here

Credit card debt: from 'revolver' to 'transactor'

Credit Card Users Luke Sands and Marta Sliwinska use different approaches to avoid debt. Picture: Philip Norrish Source: National Features

PLASTIC users are a divided bunch. In banking terms, they are usually split into one of two groups: either "transactors" or "revolvers".

The latter is a financial institution's preferred customer, with these cardholders only making minimum monthly repayments on their bill and, consequently, paying hefty amounts in interest.

NAB's acting general manager of cards and personal loans, David Berry, says the majority of credit card users do manage to pay off their card before interest hits.

"Approximately 55 per cent of our customers pay their account off in full every month," he says.

"Customers who have a large revolving balance on their credit card should move to a low-rate card."

Transactors are certainly the savvy ones -  they use credit cards to their advantage and avoid interest by paying off their bill in full each month.

Luke Sands, 24, says he has a credit card with a $1000 limit and pays it off in full each month, while Marta Sliwinska, also 24, says she doesn't always manage to pay her card off.

"I try to pay it off in full, sometimes for a larger purchase I leave some of it on there and then pay it off," Sliwinska says.

"I probably use my card about five times a month."

Many credit cards on the market have high interest charges - some more than 20 per cent  - so users are badly hit if they can't pay off their debt each month.

And the customers paying these amounts are the ones who prop up the credit card system and allow the banks to make healthy profits.

ME Bank's acting head of cards, Iain Turnbull, says the two types of card users are worlds apart.

And, he says, it can be difficult to move from being a revolver to a transactor.

"There's some behavioural things you can do but it comes down to the level of balance that you are carrying to work out how difficult it is," he says.

"In the extreme we are helping people through hardship, consolidating debts and moving it to the lowest interest rate, whether that's a home loan, personal loan or cheaper credit card."

It's no secret the nation's appetite for credit has softened and Turnbull says plastic growth has been around 1.9 per cent since 2009, compared with 8 per cent in 2006.

Comparison website's RateCity spokeswoman Michelle Hutchison also says there are ways to jump from being a revolver to a transactor.

"There are definitely strategies that credit card users take to move from a revolver to a transactor and everybody should aim to be a transactor as opposed to a revolver because (otherwise) you will be paying interest forever," she says.

"Look at your budgeting  - you're obviously spending more than you are earning."

When choosing a credit card, consumers should look closely at the fees, if indeed there are any, that are associated with the card.

Many card users will be familiar with annual fees but these can easily be avoided as many cards don't have this charge. Credit card reforms last year also resulted in a multitude of changes for plastic users, with new cards taken out after July 1 forcing providers to direct repayments to the most expensive part of the debt first to reduce the amount owing faster.

You will also be asked to nominate your own credit limit.

View the original article here