Debt Consolidation

Debt consolidation is the restructuring of debt to simplify and streamline finances.  Its the process of combining multiple debts into one monthly repayment. Consolidation strategies may:

  • Lower your interest rate
  • Lower monthly repayments
  • Pay down debt faster
  • Save money on interest

Popular Consolidation

Personal Loans – Credit Card Balance Transfers – Refinance – Line of Credit

Is Consolidation Safe?

Compare Rate & Fees – Check Terms – Check Company Reviews & Licence

Qualifying Considerations

Credit History/Score – Proof of Income – Debt to Income Ratio

How it works

What exactly is Debt Consolidation?

If you’re dealing with unmanageable debt, such as multiple bills with different interest rates, repayment amounts and due dates, debt consolidation is a solution to help manage this.

Consolidating debt is the process of combining multiple debts like credit cards, store cards, personal loans, and other bills into one monthly repayment. Debt consolidation solutions may lower your overall interest rate, which can help you save money on interest, lower your monthly payments, and pay down debt in less time.


What are the benefits?

Debt consolidation is a popular solution for those juggling multiple debts looking to streamline their finances. Here’s why:

  • You make one monthly payment for all of you debts
  • Reduce your monthly repayment amount – see our consolidation calculator
  • Reduce the amount of interest you pay
  • Have a clear end date to your repayments
  • Stop any collection calls as debts are paid off
  • Maintain or improve credit score (by avoiding late payments)

What are the drawbacks?

Debt consolidation isn’t right for everyone. There is a qualification process for borrowing and the risks include:

  • The possibility of increased debt. By freeing up credit, there can be the temptation to spend again
  • Prolonged debt period. In certain instances, repayments may be lower but they are paid over a longer period of time. This may also increase the amount of interest owed
  • People who use their home to refinance and consolidate debt, risk losing their home if they cannot repay the debt
  • Not everyone qualifies for finance
  • Consolidation does not eliminate debt, it restructures it
  • Initial interest rate of the finance may increase over time

General Consolidation Qualifications

Debts that can be included

With an unsecure debt consolidation loan, most debt can be paid off,  examples include:

  • Credit Cards
  • Store Cards
  • Payday Loans
  • Personal Loans
  • Medical Fees
  • Outstanding Bills (utility, phone, etc)
  • Business Debt
  • Tax Debt, etc.

Other debt consolidation solutions such as balance transfers, are primarily for credit and store cards.

Do I qualify for debt consolidation?

General qualification criteria for debt consolidation include:

  • Must be 18 years of age
  • Must be an Australian citizen or resident
  • Have a good credit history
  • Proof of income (employed or self employed)
  • Good financial standing (ability to service finance)

Each credit provider or lender will have its own approval process and criteria. The above highlight the minimum requirements most lenders require.

Debt Consolidation Example

Unsecured Debt & Monthly Repayments


Credit Card #1 $12,000 $300
Credit Card #2 $5,000 $125
Credit Card #3 $10,000 $250
Personal Loan $8,000 $188
Store Card $5,000 $137
Payday Loan $1,500 $226
Overdraft $8,000 $180
Total Owed $49,500 $1,406

Consolidated Payment





A consolidation loan of $50,000 with a interest rate of 8% over 5 years would change the monthly repayment of $1,406 to $1,014.

A difference of $392 a month or $4,704 a year.

How much could debt consolidation save you?

Current Debt


Total Debt$0

Total Repayments$0 per month

New Consolidation Loan

Interest Rate
Years to pay back

New Monthly Payment$0

You could save$0 per month


Need some help?

Is it bad to consolidate debt?

Consolidation is a strategy to streamline finances, making it easier to manage financial obligations. As with all debt relief strategies there are pros and cons. Understanding the strategy, and sticking to the plan, can result in positive outcomes.

The main factor in successful debt relief, regardless of strategy, is the improvement in behavior towards money (financial skills).

Consolidation is a good idea when your monthly bills have been simplified, repayments reduced, and there is a real short and long term benefit to you. Debt consolidation is therefore a popular relief and reduction strategy.

Do debt consolidation loans hurt your credit score?

There are numerous factors that determine how a debt consolidation loan may positively or negatively impact your credit score, including your current financial situation.

Whenever you apply for new credit, simply enquiring into credit can negatively impact your credit score. In particular, a lot of enquiries in a short period of time can damage your score.

Alternatively, if you have good credit and good cash flow, securing new credit may be easier; and by paying off multiple debts you could improve your credit score.

Can I use my credit card after debt consolidation?

The short answer is “yes” if you don’t close the account when it was paid off. However, as mentioned in the drawbacks section, this can lead to more debt.

Debt consolidation companies - Finding a reputable company

There are numerous debt consolidation companies throughout Australia. A good place to start is to do an online search for reviews on the company. Below are some additional considerations:

  • Check the company is licensed, has a ABN/ACN
  • Review interest rates, fees and charges compared to other providers.
  • Check the terms closely making sure there is a genuine benefit to you.
  • Be wary of companies that use scare tactics, rush agreements/contracts, do not provide full disclosure of pros & cons (especially drawbacks)
  • Be mindful of promises made verbally versus in writing.

Free government debt consolidation help

In Australia there are debt relief programs available that are funded by the government. Below are some of the more popular options:

  • Free Financial Counselling – A financial counsellor can review your financial situation and provide different financial solutions including negotiating new repayment terms with your creditors.
  • Speak to the National Debt Helpline – This is non-profit service similar to the financial counselling program above. They provide a free, independent and confidential service.
  • MoneySmart – Is a financial based website run by the Australian Securities & Investment Commission (ASIC). It is a great resource on everything finance, including detailed information and links to actual government-run services.

What happens when you do debt consolidation?

Consolidation means that you are combining multiple debts into one debt. Essentially it is a restructuring of your finances so that they are more manageable. If you have multiple credit cards, store cards, or personal loans; consolidation may be a way to simplify your debt and lower repayments.

See our benefits and drawback section

How can I get a debt consolidation with bad credit?

Qualifying for a debt consolidation loan with bad credit can be difficult. Most lenders that provide unsecured loans will require a good credit score. Lenders that  accept impaired credit, generally require security and/or they charge a higher interest rate – which can be counter-productive to debt consolidation.

Ideally a consolidation loan has a lower interest rate to the debt being consolidated.

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