Many UK consumers will pay a higher interest rate and take on more debt with a personal loan than if they just spent on credit cards, according to research carried out by MoneyFacts.
The group say that the credit crunch has forced providers to examine the rates of interest they charge on their financial products, with many opting to increase the cost of their loans.
Nationwide now charge 17.4% for a loan of £1000 to £3000 which is 1.5% higher than their credit card charges.
Traditionally it is unheard of for loans to cost more than credit cards, especially for those with no history of debt or financial problems.