Hi everyone, my sisters plan to travel around Europe for a few months, and plan to get an unsecured personal loan. I was thinking to tell them to get this one as it's flexible St. George Get Set Loan or this one Police and Nurses
Anyone know of any others loans? They want to borrow around $20k.
They plan to pay the minimum amount for 6 months, then pay it off as soon as possible when they get back.
We live WA.
Yeah thought of that, but none of us have a home loan.
How about applying for a no interest CC? Not sure if they issue that high of a limit out.
They do both have a NAB Low Rate Visa Credit Card(55 days interest free), which they are using now so they can save cash for their trip. Isn't there fees for every time you use a credit card overseas?
@ozhunter: why are they going to use this card overseas? if they get a personal loan they can't access this overseas. I think you are confusing the two concepts. If you get a low rate credit card you use it like the personal loan, take out the cash.
You will unless you get the Wizard Mastercard, which has a high interest rate, pay for accessing money overseas no matter. So if you get a loan, you will have to put the money into travellers checks or transfer to a bank that you can access in Europe which would still involve fees.
Advantage of the low rate credit card is you only take money out when you want it vs the personal loan which often gives you the $20K, but you take the money out and pay the interest on the total.
Lets assume that the rates on the two are the same so you can understand the concept.
So $20K at 12% for 6 months = $1200
Where as taking out $4000 per month at also 12% = $800 after 6 months
Now maybe the personal loan will let you draw it down as needed, so this is not a valid comparison, but some dont let you do this
Now you could save more if you have 2 credit cards as such
The wizard that you pay off as the bills come in from withdrawals from the low interest credit card. probably need a family member (you?) to manage this for them while they are away. Also you can tell them how they are tracking with actual spend (as the money is in $A)
BUT will they get 2 credit cards approved?. Might be wise that one gets one card the other gets the other card.
Then again traveling through borrowing money - well I wont play Dad with that advice…
On checking the St George get set loan is 16.89 % p.a. and there is establishment fee $150 and $9 a month fee
The police Credit union loan says its a 2 year loan, so not easy to pay out early its rate is 14%
Low rate CC start at 9.99% Bankwest see http://www.canstar.com.au/credit-cards/compare/daily-less-50…
@[Deactivated]: 2 things here:
Cash Advance rates are almost certainly always higher than the Purchase rate. Also be aware that most credit card issuers charge a fee for taking cash advances (commonly 2% of the cash out value). Be sure to read ALL terms and conditions before deciding which product is suitable for you.
Cash Advances are generally, only used by High Risk customers (from the view of the financial institution). This is the reason why the Cash Advance interest rate is almost certainly always higher; it is to cover the costs of customers that use Cash Advances and are unable to repay. Further to this, because of this reason, using cash advances will generally put you into a 'high risk' category within the financial institution, which could then lead to other implications such as difficulties in obtaining/extending other loans or lines of credit from that financial institution.
BTW, the Canstar website is outdated, the rates don't reflect the recent interest rate rises. (The report is dated November 2009 - "All information is correct as at 16th November 2009")
An example of Cash advance rates:
Bankwest lite:- Purchase APR 10.75% , Cash Advances APR 21.74% , Cash Advance Fee 2% or $4 whichever is greater. http://www.bankwest.com.au/library/pdf/pds_20070119-161132.p…
So in reality, if you take out $2000 cash from the Bankwest credit card, you actually owe $2040 @ 21.74%pa interest.
I work in the industry and my advice to you is that, if you are concerned about finances, you should seek proper financial advice from a financial planner. A financial planner will be able to provide you with advice specific to your situation. Or alternatively, make sure YOU thoroughly do your OWN research and read all the terms and conditions.
@skysky: Very good points - thank you for the enlightenment on the cash rate difference. That would really change the strategy.
If you have a home loan, you can add 2K to your house (better interest rate than unsecured personal loan)