WITH Christmas and the New Year celebrations now behind us, the only
question remaining is: How do we pay for our excesses from the festive
season?
Financial sector statistics are already showing that
Australians spent long and hard at Christmas, and many then followed up with
more spending over the traditional sales period.
The result in many cases is that store cards and credit cards are bursting at
the seams and the cost of excessive overruns on credit payments of these types
can be horrific.
One simple answer is debt consolidation, and one of the best ways to
consolidate debt is through a personal loan.
For example, you may have pushed your major credit card to $3000 in debt,
with a further $1500 of debt on a second credit card, and a store card debt of
$1500 after buying presents and other goods.
In short you have $6000 of debt which has to be serviced quickly and you do
not have the funds to do this.
This debt can be consolidated through the use of a personal loan. The $6000
debt can be rolled into one account, and even more can be added for future use.
The big advantage of a personal loan is that the interest paid on a loan is
far less than that on a credit card or store card.
Most credit cards attract interest around the 16-17 per cent per annum mark
and store cards can run as high as 22 per cent.
A secured personal loan usually attracts a rate of about 9 per cent, while an
unsecured personal loan is usually about 12 per cent.
Of course a personal loan can be used for much more than debt consolidation.
It can be used for a motor vehicle, home extension, swimming pool, veranda or
pergola or even to fund a special holiday.
As always, shop around for the personal loan that best suits individual
needs, but it pays to ensure that whichever personal loan you choose it offers
flexibility in repayments and access.
* Stephen Small is chief general manager banking with Adelaide Bank.
