Personal loans a good alternative to cards

Credit cards, redraw mortgage facilities and consolidation of some smaller financial institutions has contributed to the decline in the numbers of customers considering a personal loan as a source of credit. However Commonwealth Bank reports that number of personal loans being approved is increasing in the last few months.

The key advantage of a personal loan is as a structured finance instrument. It has a set time period and ususally a fixed interest rate, giving the borrower certainty about repayments.

Unlike a credit card, there is usually no ability to spend more money and pay just the interest charges. The most popular reasons for taking out a personal loan is to buy a car, consolidate debts, home renovations or long holidays.

Source: The Australian