Could a personal loan save you from Christmas credit card interest?

Ben Tosi

21 Dec 2017

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Congratulations, you’ve managed to get all of the gifts under the Christmas tree and the fridge is fully stocked, but after a frantic December, are you a little hesitant to take a peek at your credit card statement?

If that is the case, you can take some solace from that fact that you’re not alone. In fact, Aussies are likely to whack about $29 billion worth of Chrissy expenditure on their credit cards throughout December - that’s almost $4,000 per household.

With credit card interest rated as the fourth biggest money drain on Aussie households, the cost of Christmas could continue well into the new year for those unable to pay off their balance in full at the end of the December statement cycle.

And while taking out another loan might seem like the last thing you want to do, SocietyOne’s Maria Loyez insists that using a personal loan to consolidate your debt is a smart strategy to manage repayments and avoid the pricey purchase rates on a lot of plastics.

“If you have multiple credit cards or loans, this can cost you hundreds or thousands of dollars in interest which could be better used towards your goals,” she said.

“Consolidating your debt into a fixed-term personal loan, with lower interest rates than credit cards, can be a good option to reduce interest and allow you to plan ahead with manageable monthly payments.”

If the idea of grouping all of your Christmas debt into one, low-interest loan sounds attractive to you, check out a bunch of popular options below or to find out what your repayments would look like use Mozo’s personal loan repayments calculator.

Popping personal loans - rates updated daily

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Wisr

Wisr

Unsecured Personal Loan (Fixed)

interest rate

7.95% p.a.to 19.45% p.a.

comparison rate*

8.78% p.a.to 20.4% p.a.based on $30,000
over 5 years

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Symple Loans

Symple Loans

Personal Loan (Variable, Unsecured)

interest rate

5.75% p.a.to 21.99% p.a.

comparison rate*

7.17% p.a.to 25.71% p.a.based on $30,000
over 5 years

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OurMoneyMarket

OurMoneyMarket

Low Rate Personal Loan (Excellent Credit) (Fixed, Unsecured)

interest rate

8.00% p.a.

comparison rate*

8.21% p.a.based on $30,000
over 5 years

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MoneyPlace

MoneyPlace

Unsecured Personal Loan (Fixed)

interest rate

7.65% p.a.to 26.99% p.a.

comparison rate*

7.65% p.a.to 23.5% p.a.based on $30,000
over 5 years

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SocietyOne

SocietyOne

Unsecured Personal Loan (Fixed)

interest rate

7.50% p.a.to 14.99% p.a.

comparison rate*

9.51% p.a.to 12.71% p.a.based on $10,000
over 3 years

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^The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are for the amounts and terms below, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan. ^Based on $10,000 over 3 years ^^Based on $30,000 over 5 years

The pros and cons of personal loan debt consolidation

Pros

Typically lower interest rates than on a credit card
One, easy-to-manage loan
Ability to go with a fixed rate, meaning you know what your repayments will look like for each instalment
Unsecured loans available, meaning you won’t have to offer any collateral

Cons

Pricey upfront cost to take out the loan
Minimum loan term, meaning you’re unable to pay off the balance and close the loan early

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