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Loans over cards to manage debt: study

Credit card applications have eased and demand for personal loans increased as Australians find new ways to consolidate debt, a study by credit rating agency Baycorp Advantage found.

According to the company's Consumer Credit Demand Index, growth in credit card applications eased to just 0.4 per cent in the year to September, falling to 931,576 for the September quarter, or by 0.02 per cent, compared to the June figures.

Meanwhile, personal loans applications grew by 6.7 per cent to 683,677 since the September 2005 quarter.

Baycorp Advantage's managing director Andrew Want said the trend indicated a "next wave" of debt consolidation, where consumers were moving from credit cards to personal loans to meet their credit demands.

"Debt consolidation certainly appears to be one aspect of the latest demand growth for personal loans," Mr Want said.

"The data suggests we are seeing the next wave of debt consolidation. First we had consumers transferring outstanding balances to cards offering a zero-interest period, now personal loans seem to be gaining popularity."

According to the survey personal loan applications grew across all states and territories, with the ACT recording the biggest jump, up 9.8 per cent to 12,064.

Credit card applications fell in Victoria, Western Australia, Tasmania and the Northern Territory, which recorded the biggest decline of 14.9 per cent.

South Australia recorded the strongest growth, up 6.4 per cent to 56,237 credit card applications.

News Source: http://www.theage.com.au/

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.