💳 Your Current Debts
Debt NameBalanceRate % p.a.Min Payment/mo
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Typical personal loan consolidation: 8–13% p.a.
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Monthly Payment Saving
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Total interest saved
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New single repayment
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Debt-free in
⚖️ Before vs After Consolidation
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Debt Consolidation in Australia: When It Makes Sense (and When It Doesn't)
Debt consolidation means rolling multiple debts into a single loan — usually at a lower interest rate — to simplify repayments and reduce total interest paid. It's one of the most effective debt management strategies available to Australians, but it only works if done correctly.
When Consolidation Makes Sense
- You have multiple high-rate debts — especially credit cards at 18–22% p.a.
- Your consolidation rate is meaningfully lower than your weighted average current rate
- You can commit to not accumulating new debt after consolidating
- The monthly saving reduces financial stress and gives you breathing room
When to Be Careful
- If extending the loan term increases total interest paid despite a lower rate
- If you consolidate and then keep spending on credit cards
- If the new loan has high fees that eat into the savings
- If the debt is secured against your home (risk of losing it if you miss repayments)
Credit Card vs Personal Loan Consolidation Rates 2025
| Product | Typical Rate | Best For |
|---|---|---|
| Balance transfer credit card (intro) | 0% for 12–24 months | Smaller balances you can clear in the promo period |
| Personal loan (unsecured) | 8–15% p.a. | Medium debts, 2–5 year repayment |
| Personal loan (secured) | 6–10% p.a. | Larger amounts with an asset as security |
Estimates only. Not financial advice. Contact a financial counsellor (1800 007 007 — free) or compare products at moneysmart.gov.au.
Frequently Asked Questions
Does debt consolidation hurt your credit score in Australia?
Applying for a new consolidation loan involves a credit check which temporarily lowers your score. However, successfully managing and paying down consolidated debt over time improves your credit score. Closing paid-off credit card accounts (optional) can also improve your debt-to-credit ratio.
What is the best way to consolidate debt in Australia?
For credit card debt: a balance transfer card (0% intro rate) works best for amounts you can pay off within 12–24 months. For larger mixed debts: a personal loan at 8–13% p.a. consolidates everything into one manageable repayment. For homeowners: a mortgage redraw can offer the lowest rate, but be aware you're converting short-term debt into 25-year secured debt.
Can I get free debt consolidation advice in Australia?
Yes — the National Debt Helpline (1800 007 007) provides free, confidential financial counselling. ASIC's MoneySmart website (moneysmart.gov.au) also provides free tools and guidance. These services are funded by the government and have no sales incentive.