Whether it's paying for a holiday or Christmas gifts, Aussies are prone to reach for their credit cards when they need some extra cash.
According to data from the Reserve Bank of Australia and Finder.com.au, the nation spent a total of $29.7 billion on credit cards in December 2018 alone, or $1,863 per person. This number is up $1.8 billion from the previous December.
Credit card use has increased by 46% over the past decade, while personal loans lag behind at just 17%, despite their lower costs overall. So why is Australia addicted to credit cards, and is a personal loan really better?
Unlike credit cards that can keep being extended for more debt, personal loans are an instalment debt. You know exactly how much you have to pay and how long you need to pay it. Personal loans are generally the better option for large or long-term expenses and they can have other advantages too.
You should avoid using credit cards unless you have no other option, due to the high interest and charges you could face. If you do need to borrow money though, credit cards are better suited to smaller, everyday purchases that you should be able to pay off within the month, rather than bigger expenses that could build credit card debt.
The choice between a personal loan or a credit card can depend on a number of factors, including the amount you want to borrow, how soon you plan to pay it back and your credit score. Talking to a financial advisor should help you to decide which borrowing option is the best fit for your circumstances, or they could help you to discover more alternatives.
Call Debt Fix's experts today on 1300 332 834 for confidential, no-obligation debt advice.