Rising interest rates have forced many Australians to re-think personal debt, with many turning to personal loans in preference to credit cards.

It's a move that can make good money sense as personal loans offer some distinct pluses over 'the plastic'.

The issue of higher rates has largely centred around home loans, however rate hikes also filter through to other lending products like credit cards and personal loans.

In fact a number of credit cards, especially those offering points-based rewards, are currently charging interest of up to 20% annually.

The situation hasn't escaped the attention of consumers, and research group Cannex says there has been a noticeable shift away from credit cards in favour of personal loans.

Personal loans do offer some key points of appeal.

The fixed term helps put a cap on the amount of interest you will pay over the life of the loan. And the set monthly loan repayments allow for better household budgeting.

In addition, taking out a personal loan involves the inevitable loan application and approval process.

This takes time, and while it may seem inconvenient, it also helps cut back on impulse buying.

Applying for a loan forces us to think carefully about how much money we'll have to repay each month, usually over several years.

That can be enough of a reality check for some people to bypass an unnecessary purchase - a good thing if you're spending with your heart rather your head.

The lower rate applicable to many personal loans can also make them a cheaper option than a credit card, particularly for big ticket buys.

At present it's possible to get a secured car loan for slightly less than 9.0%p.a., with unsecured loans typically costing between 12% and 14% annually.

That's not to say personal loans don't have downsides.

In addition to application fees, you could face an exit charge if you want to pay off the loan early.

This fee underlines the importance of shopping around for the right loan in the first place.

Note too, you won't generally be able to make extra repayments on the loan as you can with many home mortgages.

Cannex has compiled a star-rating of personal loans, which provides the rate currently applicable to each product.

If you're in the market for a loan it's well worth a look. Download a copy of the report from www.cannex.com.au.

One of the interesting aspects of the survey is that many of the more highly rated loans are offered by credit unions, so it's worth extending your enquiries beyond the big name financial institutions.

Shopping around could mean getting a far better deal. Ultimately though a personal loan means taking on more debt, so only take on what you can comfortably afford to repay.