Around one in three New Zealanders pays interest on their credit cards because they don't pay off the full amount every month.

That interest can be as much as 20.95 per cent for a standard card at a bank and even higher for a store card or finance company card.

But could you be better off paying off the debt by getting a peer-to-peer loan?

Peer-to-peer lending is relatively new to New Zealand but there are now four companies licensed to operate online platforms which involve matching up borrowers with lenders.

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Peer-to-peer lenders claim to offer lower interest rates than the banks because the don't have the running costs of a bricks and mortar business.

Interest rates on peer-to-peer loans start from as low as 6.64 per cent for a secured loan and 9 per cent for an unsecured loan.

But the interest rate you get can depend on how credit-worthy you are.

If you have a poor credit record you may not get offered a loan at all.

Harmoney, New Zealand's biggest peer-to-peer lender has so far only lent out money to around 20 per cent of the people who apply for loans.

Harmoney general manager Monica Mathis said: "We do not approve all of the people that come to us for debt consolidation."

Mathis said it undertook two credit checks and even a small default like failing to pay a video fine would prevent it lending to a borrower.

"That might change in the future," Mathis said.

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She said it also looked closely at a person's assets and liabilities and anything that was related to gambling was a big red flag.

Then it comes down to whether a person can afford to repay the loan.

"Just because people apply for credit doesn't mean they can afford it."

While loan interest rates at Harmoney start at 9.99 per cent they can go as high as 39.99 per cent.

According to Harmoney's statistics the average interest rate being paid by its borrowers is 22.09 per cent which means some people are paying more than what they would be on a standard credit card.

Borrowers could be much better off switching their debt to a low interest credit card which typically charge 12 to 13 per cent or, even better, grabbing a special zero per cent interest rate advertised for balance transfers.

Raewyn Fox, chief executive of the Federation of Family Budgeting Services, said if borrowers were able to pay no interest on their debt they were best to stick to that option.

"If you have got a debt that is not attracting interest - replacing it with interest bearing debt is always going to cost money."

Zero interest deals usually only last for a set amount of time like six months or a year.

Borrowers need to ensure they pay off the debt in that time frame or they will start paying interest on it again.

Purchases made on those cards also typically attract high interest rates so don't be tempted to keep adding to your debt.

If it's going to take longer than that time-frame to pay off the debt then a peer-to-peer loan could be a cheaper option.

But Fox said borrowers needed to work out the total cost over the time they will take to pay it off.

"It's only worth it if you have done the total sums of out what it is going to cost long-term."

Fox said borrowers should be wary if they are paying less per month but paying off the debt over a longer time-frame.

Peer-to-peer lenders have different borrowing time-frames.

Squirrel Money has a minimum loan period of two years while Harmoney's lending is done over either three or five years.

LendMe said its borrowers could get a loan term of one year while Lending Crowd has a three year minimum.

Borrowers are able to pay back the loans sooner than the term.

Peer-to-peer lenders also charge a loan establishment fee which varies among the platforms.

Fox said those with debt problems should sort them out before re-financing as there was little point in doing it if people kept racking up debt on their credit cards.