Debt consolidation
One repayment, one rate, and a date the debt ends
Several debts at several rates is expensive and hard to track. Consolidating replaces them with a single fixed repayment — but only worth doing if the numbers genuinely work. Here's how to check.
Work out whether it's worth it
The mistake people make is looking only at the monthly repayment. A longer term always makes the monthly figure look better, even when the loan costs more overall. So the calculator here shows you both: what changes month to month, and what the whole thing costs.
Enter what you owe now and the rate on each debt. The defaults are typical Australian figures — a card at around 21%, a personal loan in the low teens — but change them to match your actual statements for a result that means something.
The number to watch
If consolidating lowers your monthly repayment but raises your total interest, you're buying breathing room, not saving money. That can be a perfectly reasonable trade when cash flow is tight — just make it on purpose rather than by accident.
When consolidation tends to work
- You're carrying revolving debt at 18–22% and can qualify for a fixed loan well below that
- You're juggling four or five due dates and losing track of them
- You have the discipline to leave the cleared cards at a zero balance
- Your income is stable enough to commit to a fixed repayment for the full term
When it doesn't
- The new rate isn't much better than what you're already paying
- You'd need a seven-year term to make the repayment affordable
- The pattern is that cleared cards get run back up — consolidation then doubles the debt
- You're already behind on payments, in which case hardship assistance or free financial counselling is the better first move
Compare consolidating your debts
Enter what you owe now and what rate each debt charges. Change any figure to see the difference.
Credit card
Personal loan
Car loan
Other debt (BNPL, store card)
- Total debt consolidated
- $37,000
- Paying separately, per month
- $0.00
- One consolidated repayment
- $0.00
- Interest on the new loan
- $0
Context
Why this comes up so often right now
Australian credit card debt accruing interest sits in the order of $20 billion, at an average purchase rate near 18.6%. Around a third of Australian adults carry a card balance from month to month. Debt consolidation is consistently one of the most common reasons people take out a personal loan in this country — close to a quarter of all personal loan purposes, according to ABS data.
With the cash rate held at 4.35% and inflation still above target, the spread between revolving credit and structured lending hasn't narrowed. That's the arithmetic driving the decision for most people who consolidate.
- ~18.6%
- Average credit card purchase rate in Australia
- ~23%
- Share of Australian personal loans taken out for consolidation (ABS)
- 1–7 yrs
- Typical personal loan term available in the Australian market
The process
What actually happens
List every debt
Balance, rate and minimum repayment for each. Statements or a credit report will have all of it. This step alone tells most people something they didn't know.
We model it properly
We compare your current total cost against real consolidation options, including fees, and show you where the break-even sits.
The lender pays your creditors
If you proceed and are approved, most lenders settle your existing debts directly rather than depositing funds to you — which removes the temptation and confirms the balances are actually cleared.
Refinancing or consolidating existing debt may increase the total amount of interest and fees you pay over the life of the loan, particularly if you extend the repayment term. Consider the total cost, not only the repayment amount.
FAQ
Debt consolidation questions
Will consolidating actually save me money?
Only if the new rate is meaningfully lower than what you're paying now, and you don't stretch the term so far that the extra years cancel out the saving. Replacing a card at around 20% with a personal loan at 12% over three years saves real money. Replacing the same card with a seven-year loan at 16% usually doesn't. The calculator on this page shows both numbers — the monthly change and the total interest — because the monthly figure on its own can be misleading.
Does consolidating hurt my credit score?
Applying creates a credit enquiry, and closing old accounts can shorten your average account age, so there's often a small short-term dip. Over the following year, a single loan being paid on time usually reads better on a credit file than several revolving debts sitting near their limits. The bigger risk to your score is missing repayments on the new loan.
Can I consolidate if I have a default or missed payments?
Often yes, though the rate will be higher and some lenders will decline outright. It depends on how recent the default is, how large, and whether it's been paid. Be upfront with us about it — we'd rather aim at a lender who accepts it than waste an application on one who doesn't.
Should I roll my debts into my home loan instead?
Sometimes, and sometimes it's a trap. Home loan rates are lower, so the monthly cost drops sharply. But spreading a $20,000 card balance over 25 remaining years can cost more in total interest than clearing it over four, and it converts unsecured debt into debt secured against your house. If you go this route, the sensible version is to split the consolidated amount into a separate, shorter sub-account rather than absorbing it into the main loan.
What debts can be included?
Typically credit cards, store cards, personal loans, car loans, buy-now-pay-later balances and some ATO or utility arrears. Lenders differ on what they'll refinance, and most will want to pay your creditors directly rather than deposit the money into your account.
What if I can't afford my repayments right now?
Then a new loan may not be the right answer, and we'd rather tell you that than sell you one. If you're behind on payments or being contacted by debt collectors, the National Debt Helpline on 1800 007 007 gives free, confidential financial counselling. You can also ask any credit provider for hardship assistance — they're legally required to consider it.
See whether consolidating your debts stacks up
We'll model your actual balances against real lender options and tell you honestly whether it's worth doing.
Checking your options does not affect your credit score. A credit check is only done if you decide to apply with a lender.