Secured loans preferred over credit cards
More and more consumers in the UK are opting for a secured loan over credit card borrowing. The main two reasons for this change in trend is said be due to the increasing interest rates associated with credit cards and the increase in home equity due to rising house prices.
Homeowners seem to be realising that they can have quite handsome sums tied into their property which can be released by either remortgaging or through a secured loan.
Credit card borrowing can be quite costly even on cheap cards compared to the cost of securing a loan against the equity in your home.
That said, consumers should still be vigilant when shopping for secured loans as rates and interest repayable can vary massively. However, as a means of attaining credit at an affordable rate, secured loans can almost certainly be the better option.
A recent statement by the BBA suggested that credit card borrowing in January was weaker than the second portion of last year, whereas mortgage borrowing continued to grow with a high rate of acceptances in the latter part of 2006.
