Why smart Aussies are dumping credit cards for personal loans

Kirsty Timsans   |   04 Jul 2017

Key Points

• Personal loans are now a lot cheaper than credit cards

• Personal loans are much easier to pay off than credit cards

• Good credit borrowers can now access rates starting below 5%

There's a quiet revolution going on in the otherwise boring world of banking: thousands of smart Aussies are cutting up their credit cards in favour of personal loans. And for very good reason, which we'll get to in a sec.

But first, back to the revolution. Personal loan borrowing is growing twice as fast in Australia as credit card debt, Mozo's analysis of the latest APRA data reveals. In fact, personal loans are fast becoming the borrowing tool of choice, particularly for those with good credit ratings.

So why are thousands of Aussies suddenly driving better borrowing deals?

1. Personal loans rates are the lowest they've been in years

While the average credit card rate is stubbornly stuck above 17%, personal loan rates are falling and have hit a new average low of 11%. Personal loans are now a vastly cheaper alternative to credit cards for big household expenses, holidays and other big ticket purchases. 

2. Personal loans come with repayment plans so you can avoid decades of debt

The reason it's so easy to rack up credit card debt is that the minimum repayment is typically so low it can take decades to pay off the average balance if you're only paying the minimum each month. By contrast personal loans are designed to be paid off over a set period of your choice, commonly one to five years.

3. Good credit borrowers are being rewarded with razor sharp rates

There's a new breed of online lenders in town who are taking on the banks with rates starting from under 5% for borrowers with good credit history. The likes of RateSetter, SocietyOne and MoneyPlace offer tailored loans based on your credit record, along with fast online approvals and no nasty exit fees.

Mozo compares 186 personal loans from 43 bank and non-bank lenders. Click here to compare rates and calculate repayments, or view today's Top 10 personal loans below.

Top 10 Personal Loans - September 2017 - rates updated daily

• Promoted

  Australian Military Bank

  Australian Military Bank

  Unsecured Personal Loan - Excellent Credit (Fixed)

  interest rate

  7.93% p.a.to 18.87% p.a.

  comparison rate*

  8.77% p.a.to 20.27% p.a.based on $30,000
  over 5 years

  fees

  $100.00upfront and $10.00/month

  Go to site
• Promoted

  SocietyOne

  SocietyOne

  Unsecured Personal Loan - Excellent Credit (Fixed)

  interest rate

  7.50% p.a.to 9.99% p.a.

  comparison rate*

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

  fees

  $300.00upfront and $0.00/month

  Go to site
• Promoted

  Bank Australia

  Bank Australia

  Lifestyle Personal Loan (Variable, Unsecured)

  interest rate

  11.89% p.a.

  comparison rate*

  12.94% p.a.based on $10,000
  over 3 years

  fees

  $150.00upfront and $0.00/month

  Go to site
• Promoted

  HSBC

  HSBC

  Unsecured Personal Loan (Fixed)

  interest rate

  9.50% p.a.to 15.99% p.a.

  comparison rate*

  10.06% p.a.to 16.53% p.a.based on $30,000
  over 5 years

  fees

  $150.00upfront and $5.00/month

  Go to site
• Promoted

  ANZ

  ANZ

  Unsecured Personal Loan (Fixed)

  interest rate

  12.45% p.a.

  comparison rate*

  13.32% p.a.based on $30,000
  over 5 years

  fees

  $150.00upfront and $10.00/month

  Go to site
• Promoted

  RACQ Bank

  RACQ Bank

  Unsecured Personal Loan (Variable)

  interest rate

  12.95% p.a.

  comparison rate*

  13.25% p.a.based on $30,000
  over 5 years

  fees

  $200.00upfront and $0.00/month

  Go to site
• Promoted

  now FINANCE

  now FINANCE

  Unsecured Personal Loan - Excellent Credit (Fixed)

  interest rate

  7.95% p.a.to 11.45% p.a.

  comparison rate*

  9.42% p.a.to 12.9% p.a.based on $30,000
  over 5 years

  fees

  $495.00upfront and $13.00/month

  Go to site
• Promoted

  CUA

  CUA

  Discount Unsecured Personal Loan (Variable)

  interest rate

  10.89% p.a.

  comparison rate*

  10.89% p.a.based on $30,000
  over 5 years

  fees

  $0.00upfront and $0.00/month

  Go to site
• Promoted

  MoneyPlace

  MoneyPlace

  Unsecured Personal Loan - Excellent Credit Rating (Fixed)

  interest rate

  7.65% p.a.to 21.00% p.a.

  comparison rate*

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

  fees

  $0.00upfront and $0.00/month

  Go to site
• Promoted

  SocietyOne

  SocietyOne

  Unsecured Personal Loan - Excellent Credit (Fixed over 5 years)

  interest rate

  8.10% p.a.to 10.59% p.a.

  comparison rate*

  9.36% p.a.to 12.31% p.a.based on $30,000
  over 5 years

  fees

  $300.00upfront and $0.00/month

  Go to site

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