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Credit Card Debt Consolidation Loans

Apart for store cards, credit cards are generally reckoned to be one of the most expensive ways of borrowing. The annual interest rate is generally 2-3 times greater than a personal loan. However, cards are widely available and, if you already have one, you'll have a pre-set credit limit so borrowing up to that limit requires no additional arrangement. In short, credit card borrowing is easy.

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The usual message with credit cards is to pay off the balance every month. If you do that, the rate of interest is not relevant and you should try to use a card that offers other benefits such as earning reward points or giving cashback on everything you spend. Should there be odd occasions when you can't pay off the balance, carrying some debt over to the next month is no big deal providing you can clear it then.

The problem with credit cards is that using them is so easy and credit has been so readily available that people have treated them as a means of supplementing their income. Instead of making planned purchases with budgeted repayments, the temptation is to use credit cards to buy things you can't afford. This often leads to a cycle of debt, with the outstanding amount rising each month. If you get into this situation and can't clear the debt at the repayment date, you need to look for a solution.

A short-term fix is to reduce the cost of borrowing by going for a card that has a low interest rate. Some cards offer a zero rate for an introductory period, which may apply to purchases, balance transfers or both. This may help the problem although there will be a charge to transfer the balance to the new card. If you do use a zero rate card, you ideally want to clear the balance before the introductory period ends and charges start. You must also ensure you make your payments on time because a missed payment can result in the special rate being cancelled as well as a charge being made.

There are other considerations when acquiring a credit card. Some offer additional benefits such as travel insurance and extended warranties. However, there may be an annual fee for the service and you'll need to factor this into your costings.





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Representative Examples

Small Loan: To borrow $1000 over 28 days, you would repay $1300 with an interest rate of 30%. (1934% APR variable.)
Unsecured Loan: To borrow $1000 over 12 months, you would repay $1700 with an interest rate of 70%. This is 234% APR variable.
Secured Loan: If you borrowed $10,000 for 7 years, you would repay $19,566. This is 17.8% variable.

*Loans under $500 can be paid to your bank account within 15 minutes of approval. Loans under $1000 can typically be paid into your bank account on the same day. Loans over $1000 may take between 3-5 working days.

The APR will vary depending on the amount borrowed, and the length of time the money is borrowed over. Before applying for any financial product or service, you should always read the terms & conditions in full.



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