Personal Loans vs Credit Card Debt Consolidation

Information verified correct on September 28th, 2016

Debt consolidation credit cards or personal loans? This is the question facing thousands of people riddled with debt every single day.

It’s not an easy decision to make because of the sheer magnitude of trying to pay off debt. That’s why we have written this article to help.

The difference between debt consolidation credit cards and personal loans:

When you take out a debt consolidation card, also called making a balance transfer to a new card you roll all your existing credit card debt into the new card. This balance card offers you better interest rates on purchases plus an introductory period of 0% credit for a specific term, usually six months.

The downfalls of using balance transfers is that when the honeymoon period is over, the interest rate will revert back to much higher rates, often more than traditional credit cards and this is the dangers of dealing with such a card. Unless you pay off your debt in full before the introductory period is over you will end up with more debt instead.

On the other hand, personal loans allow you to borrow money within a set time period, usually between three and five years. During that time you pay back your loan in monthly instalments which are set. This gives you the advantage of knowing how much money you need to save every month.

Comparison of Personal Loan Offers

Rates last updated September 28th, 2016
$
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
CUA Variable Rate Personal Loan
Enjoy a competitive interest rate, flexible repayment options and no monthly fees.
From 12.99% (variable) 13.84% $1,000 1 to 7 years $120 Go to site More
Latitude Personal Loan (Secured)
Can be used for whatever purpose: renovating, buying a car, booking a holiday. Funds can be in your account in as little as 24 hours.
From 12.99% (fixed) 14.2% $3,000 2 to 7 years $250 (Loans under $4000 - $140) Go to site More
ANZ Variable Rate Personal Loan
A variable rate loan that lets you make and redraw additional repayments.
From 14.69% (variable) 15.55% $5,000 1 to 7 years $0 Go to site More
ANZ Fixed Rate Personal Loan
A flexible loan option that lets you pay off your debt, buy a car, fix up your house or cover travel costs.
From 13.95% (fixed) 14.81% $5,000 1 to 7 years $0 Go to site More

Personal loans are often cheaper than debt consolidation credit cards because they allow you to repay a debt much sooner of done correctly. On an earlier post we have done a comparison between the two to show you how much money can be saved between the options while paying off your debt all the same.

The result has been rather interesting to say the least. To recap, let’s look at the following example of debt consolidation credit cards vs personal loans.

If you need to repay a larger debt, such as a home renovation, a car, a boat or a holiday overseas you are better served with a personal loan.

Comparison of Credit Cards vs Personal Loans

Look at the following example and see the massive difference in savings between the two:

  • The cost of a 4 Year Citibank Personal Loan Repayment at 13.24%p.a.: ((538.94 times 48) plus 150) plus (7 times 48) = $26,355.12
  • The cost of a 4 Year Citi Rewards Credit Card – Platinum Card Purchase Repayment at 20.99% p.a.: (607.01 times 48) plus (250 times 5) = $30,386.48

Both of these calculations take into account all ongoing fees. Plus we chose a credit card with a high credit limit to allow for the purchase amount chosen.

It is also apparent that over the span of four years one would require a massive amount of discipline not to use a credit card (other than repaying your debt balance,) it’s near impossible.

The Citibank Personal Loan interest rate is Fixed. Credit card interest rates are subject to change at practically any time the bank wishes, making them risky for long term loans.

So in the debate of debt consolidation credit cards vs personal loans it all depends on the size of your existing debt, your spending habits and the terms offered.

Comparison of Debt Consolidation Credit Cards

Rates last updated September 28th, 2016.

ME Bank frank Credit Card

Interest rate changed from 9.99% p.a. to 11.99% p.a. on purchases, balance transfers and cash advanc

September 19th, 2016

Virgin No Annual Fee Credit Card

Balance transfer offer has been extended to 31 October 2016.

September 26th, 2016

Virgin Australia Velocity Flyer Card - Balance Transfer Offer

Balance transfer offer has been extended until 31 October 2016.

September 26th, 2016

View latest updates

Jonathan Choi Jonathan
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Earn Velocity points and repay your credit card debt with a long term balance transfer offer.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
HSBC Platinum Credit Card
Earn reward points with high credit limits, prestige services including a personal concierge service.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
ANZ First Visa Credit Card - Exclusive Offer
Take advantage of this exclusive offer and enjoy 0% p.a. for the first 12 months on balance transfers and 0% p.a. for the first 3 months on purchases.
0% p.a. for 3 months (reverts to 19.74% p.a.) 0% p.a. for 12 months $30 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $59 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
A low rate purchase card with an introductory purchase rate and a long term 0% balance transfer offer.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card. Also enjoy a 0% p.a. balance transfer rate for 12 months.
14.99% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
American Express Platinum Edge Credit Card
Receive 10,000 Membership Rewards Bonus Points when you meet the minimum spend requirement. Enjoy 0% p.a. for 12 months on balance transfers and receive a complimentary Virgin Australia domestic economy return flight every year.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $195 p.a. Go to site More info
Citi Rewards Platinum Card - Cashback Offer
Earn $250 cashback on eligible spend, plus enjoy 0% p.a. balance transfer offer for 12 months, discounted annual fees for the life of the card and a complimentary travel insurance.
20.99% p.a. 0% p.a. for 12 months $99 p.a. annual fee for the first year ($199 p.a. thereafter) Go to site More info
Citi Rewards Credit Card - Classic Card
Features complimentary rewards program along with no point expiry and a balance transfer offer.
20.99% p.a. 0% p.a. for 12 months $99 p.a. Go to site More info
Virgin No Annual Fee Credit Card
No annual fee for the life of the card with $100 cashback and a 0% p.a. offer on balance transfers for 18 months. Spend criteria applies for cashback offer.
18.99% p.a. 0% p.a. for 18 months with 2% balance transfer fee $0 p.a. Go to site More info
ANZ First Visa Credit Card
Enjoy a low annual fee, interest-free days on purchases and a low minimum credit limit.
19.74% p.a. 0% p.a. for 18 months with 3% balance transfer fee $30 p.a. Go to site More info
HSBC Platinum Qantas Credit Card
Receive 60,000 bonus Qantas Points on eligible spend within 3 months. Enjoy access to premium benefits and complimentary insurance.
19.99% p.a. $199 p.a. Go to site More info
BankSA Vertigo Visa
A low interest rate card with a low annual fee, a long term balance transfer offer and an introductory offer of 1% p.a. for 12 months on purchases.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
Virgin Australia Velocity Flyer Card - 0% Interest Offer
Receive 0% p.a. for 12 months on purchases, 0% p.a. for 6 months balance transfers and an exclusive $129 Virgin Australia Gift Voucher every year.
0% p.a. for 12 months (reverts to 20.74% p.a.) 0% p.a. for 6 months $129 p.a. Go to site More info
Citi Clear Platinum Card
A platinum card with a low purchase and balance transfer offer of 0% p.a. for 9 months.
0% p.a. for 9 months (reverts to 14.99% p.a.) 0% p.a. for 9 months $99 p.a. Go to site More info
Citi Rewards Credit Card - Platinum Card
Consolidate your debt with a low balance transfer offer that will also include your personal loan.
20.99% p.a. 0% p.a. for 24 months with 1.5% balance transfer fee $199 p.a. annual fee for the first year ($249 p.a. thereafter) Go to site More info
NAB Qantas Rewards Premium Card
Get 20,000 bonus Qantas Points plus enjoy a low promotional offer of 0% p.a. for 15 months on purchases and balance transfers.
0% p.a. for 15 months (reverts to 19.99% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $250 p.a. Go to site More info
American Express Explorer Credit Card
Receive 100,000 Membership Rewards Bonus Points on eligible spend within the first 2 months of Card Membership. Also enjoy a $400 travel voucher and two complimentary airline passes per year.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $395 p.a. Go to site More info
ANZ Platinum Credit Card
Enjoy platinum card benefits with $0 annual fee in the first year and complimentary overseas travel and medical insurance.
19.74% p.a. 0% p.a. for 18 months with 3% balance transfer fee $0 p.a. annual fee for the first year ($87 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
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Credit Cards Comparison

Rates last updated September 28th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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