Tuesday 18th April 2006
Consumers have been advised that taking out a loan may prove to be more financially beneficial than paying off their credit cards.
Although a low-rate balance transfer rate on a card can be cheaper than a personal loan, Lisa Taylor of MoneyFacts has called on people to consider how disciplined they are with credit card repayments.
Unless significant, regular repayments are made against the credit card debt, consumers may find that a personal loan with structured repayments is more advantageous.
Ms Taylor said that paying off a credit card successfully takes the effort of "someone very strict".
"A credit card balance transfer may offer a more competitive rate, but you have got to benefit by making fixed payments, in line with loan repayments," she said.
"If you only pay back the minimum amount or a small amount it will end up costing you a lot more."
Adding to the debate over credit cards and loans, Alliance and Leicester has previously advised that low-rate personal loans could be more useful in making large purchases than using a credit card.
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