christmas debt

How should you consolidate debt after Christmas?

Balance transfer, debt consolidation loan or something else? Here's how to pay down your Christmas spending.

So you've made it through another Christmas. It seems to get more expensive every year, doesn't it? If you didn't plan ahead and relied on credit to get you through the festive season, you're not alone. But don't worry – there is a range of debt consolidation options available to help you pay down the credit you racked up, whether it be on a credit card or a loan (or both!).

This guide will take you through the options that are available, the benefits and drawbacks of each and how you can compare your options to choose the right one for you.

What options do I have to consolidate Christmas debt?

To consolidate debt after Christmas you have two main options: a debt consolidation loan or a balance transfer credit card.

  • Debt consolidation personal loan. These loans are unsecured and allow you to bring a number of debts into one account. By consolidating separate credit accounts you may be able to reduce interest and fees. Debt consolidation personal loans are available with terms of between one and seven years and come with rates of between 7% p.a. and 15% p.a. You can also find providers that will let you borrow with bad credit.
  • Balance transfer credit card. If you have debt across one or more cards, you can consolidate your debt to a balance transfer credit card. These cards offer introductory rates of 0–3% p.a. that apply to the balance you transfer and can remain for as long as 24 months. As long as you repay the debt within that period and don't use the card for additional purchases, you can pay down your total debt at the promotional rate. Just keep an eye on balance transfer fees and annual fees.

Which Christmas debt consolidation option is right for me?

  • If you have loan debt: There are only two providers that let you balance transfer personal loan debt to a credit card: Citi and Virgin Money. So, if you don't want to opt for these providers or just want a wider comparison, a debt consolidation personal loan is the way to go.
  • If you have credit card debt: You have the option of a debt consolidation personal loan or a balance transfer credit card. The balance transfer will be the better option if you have a smaller amount that you are confident you can pay off within the balance transfer promotional period – this is because you will be charged less interest than a personal loan. However, if you have a larger debt or just want more regular repayments that guarantee your debt will be paid off if you keep them up, a debt consolidation personal loan is the one to consider.
  • If you have credit card and loan debt: You can also choose between a debt consolidation personal loan and a balance transfer credit card that also accepts personal loan debts. Just like if you have credit card debt only, the amount of debt you have and how you want to repay it will affect which one you should choose.

Compare personal loans and balance transfer credit cards for debt consolidation

Psst...

Want to keep reading the Christmas debt consolidation guide? Jump past the comparison tables

Citi Personal Loan Plus

Citi Personal Loan Plus

from

9.99 % p.a.

variable rate

from

10.95 % p.a.

comparison rate

  • Loan amounts from $5,000
  • Offers a reusable credit facility
  • Repay over 5 years
Security Logo

100% confidential application

Citi Personal Loan Plus

Apply for a Citi Personal Loan Plus and get a competitive interest rate offer with a reusable credit facility.

  • Interest rate from: 9.99% p.a.
  • Comparison rate: 10.95% p.a.
  • Interest rate type: Variable
  • Application fee: $199
  • Minimum loan amount: $5,000
  • Maximum loan amount: $75,000
Go to site
Promoted
Rates last updated February 24th, 2018
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Product Description
NAB Personal Loan Unsecured Fixed
11.99% (fixed)
12.87%
$5,000
1 to 7 years
$150
An unsecured personal loan with a competitive fixed rate that you can make additional repayments to without penalty. Note: You must have held a NAB credit card or transaction account for at least 6 months before applying.
SocietyOne Unsecured Personal Loan
From 7.5% (fixed)
9.51%
$5,000
2 to 5 years
3% (of loan amount)
Based on your risk profile, you will receive a tailored rate between 7.5% and 20.14% with a SocietyOne personal loan. Apply before 31 March 2018 to earn 2 Velocity Points for every $1 you borrow.
Harmoney Unsecured Personal Loan
From 6.99% (fixed)
7.69%
$5,000
3 to 5 years
$500 (Upfront fee)
Interest rates are tailored to each applicant individually, and start from as low as 6.99% p.a. to 26.95% p.a. based on your credit history.
NOW FINANCE Personal Loans
From 8.95% (fixed)
10.42%
$4,000
1.5 to 7 years
$395 (Based on $10,000)
Get rewarded with a low interest rate for your good credit history. Rates from 8.95% p.a. to 18.95% p.a. depending on your credit score.
Westpac Unsecured Personal Loan
From 12.99% (fixed)
14.14%
$4,000
1 to 7 years
$250
Borrow up to $50,000 for a term of up to 7 years with this unsecured loan. Apply before 28 February 2018 for a 1% p.a. interest rate discount. Conditions apply.
MyState Unsecured Personal Loan
From 12.99% (variable)
16.42%
$3,000
1 to 7 years
$200
Apply for up to $50,000 and make additional repayments at any time without penalty.
Latitude Personal Loan (Unsecured)
From 13.99% (fixed)
15.19%
$3,000
2 to 7 years
$250 (Loans under $4000 - $140)
An unsecured loan designed for multiple purposes – renovating, buying a car or travelling. Funds can be in your account in as little as 24 hours. If you have an Unsecured Personal Loan with any Big Four bank, Latitude will beat your rate by 1% p.a. Offer ends 18 March 2018
NAB Personal Loan Unsecured Variable Rate
15.69% (variable)
16.55%
$5,000
1 to 7 years
$150
An unsecured loan up to $55,000 that you can repay early without penalty. Note: You must have held a NAB credit card or transaction account for at least 6 months before applying.

Compare up to 4 providers

Rates last updated February 24th, 2018
Fox Symes Debt Solutions
Struggling with multiple debts? Speak to a Fox Symes debt consolidation expert to help you reduce what you’re paying.
Enquire now More

Citi Credit Card Offer

Citi Rewards Classic Credit Card

0% p.a. for 15 months on balance transfers
with a one-time 1.5% balance transfer fee

Offer ends 31 March 2018

Eligibility criteria, terms and conditions, fees and charges apply

Citi Credit Card Offer

Pay a discounted annual fee for the first year, a low interest rate of 0% p.a. for 15 months on balance transfers and up to 55 interest free days on purchases with the Citi Rewards Classic Credit Card.

  • $49 p.a. annual fee for the first year ($99 p.a. thereafter).
  • 20.99% p.a. on purchases
  • 0.00% p.a. for 15 months with 1.5% BT fee on balance transfers
  • Cash advance rate of 21.74% p.a.
  • Up to 55 days interest free
  • Minimum income requirement of $25,000 p.a.
Go to site
Promoted

Credit cards with balance transfers

Rates last updated February 24th, 2018
$
% p.a.

Your search criteria didn't return any products. Click to reset your filter options and search again
Name Product Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Amount Saved Product Description
Citi Rewards Classic Credit Card
0% p.a. for 15 months with 1.5% balance transfer fee
20.99% p.a.
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
Receive 1 point per $1 spent on eligible purchases, up to $50 cashback when you meet the minimum spend and a 15 month balance transfer offer.
Citi Signature Qantas Credit Card
0% p.a. for 6 months
20.99% p.a.
$199 p.a. annual fee for the first year ($395 p.a. thereafter)
Earn from 0.5 Qantas Points per $1 spent on selected purchases and get 2 airport lounge visits per year. Plus, a discounted first year annual fee.
Citi Signature Credit Card
0% p.a. for 15 months with 1% balance transfer fee
20.99% p.a.
$199 p.a. annual fee for the first year ($395 p.a. thereafter)
Earn 1 Point per $1 spent on selected purchases plus receive a complimentary Priority Pass membership and two airport lounge visits per year.
Emirates Citi World Mastercard
0% p.a. for 9 months
20.99% p.a.
$149 p.a. annual fee for the first year ($299 p.a. thereafter)
Receive up to 60,000 bonus Skywards Miles, pay half the annual fee for the first year and indulge in curated local and global experiences.
Citi Prestige Card
0% p.a. for 6 months
20.99% p.a.
$700 p.a.
Earn 150,000 bonus Points and 1 Point per $1 spent on selected purchases and enjoy unlimited airport lounge access with Priority Pass.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
0% p.a. for 18 months
20.74% p.a.
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Save with 0% p.a. for 18 months on balance transfers and earn 3 bonus Velocity Points per $1 for the first 3 months. Offer ends on 28 February 2018.
Virgin Australia Velocity Flyer Card - Bonus Points Offer
0% p.a. for 18 months
20.74% p.a.
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Earn up to 60,000 bonus Velocity Points in the first 3 months and enjoy a discounted annual fee of $64 for the first year. Ends 28 February 2018.
Citi Rewards Platinum Credit Card
0% p.a. for 26 months with 2.5% balance transfer fee
20.99% p.a.
$49 p.a. annual fee for the first year ($149 p.a. thereafter)
Earn reward Points per $1 spent, take advantage of a 0% p.a. for 26 month balance transfer offer, plus complimentary international travel insurance.
Virgin Australia Velocity High Flyer Card - 80k Bonus Points offer
0% p.a. for 15 months
20.74% p.a.
$289 p.a.
Take off sooner with up to 80,000 bonus Velocity Points and earn up to 1 Velocity Point per $1 spent. Offer ends on 28 February 2018.
Virgin Australia Velocity Flyer Card - 0% Interest Offer
0% p.a. for 6 months
0% p.a. for 14 months (reverts to 20.74% p.a.)
$129 p.a.
Save with 0% p.a. on purchases for 14 months and 0% p.a. on balance transfers for 6 months. Offer ends on 28 February 2018.

Compare up to 4 providers

Unfortunately, Fox Symes won't be able to help you at this stage. For more information on improving your credit learn more here.

Do you have a home loan?
Do you have unsecured debts of $7,000 or greater?
Do you receive a regular income?
Have you been bankrupt in the last 13 years?
Enter your details to speak to an expert from Fox Symes

By submitting this form, you agree to finder.com.au privacy policy
Fox Symes Logo

Fox Symes can help you take back control of large debts by consolidating what you owe.

Fill out this form to find out if you can benefit from:

  • Reducing your repayments
  • Saving interest
  • A range of debt consolidation options

How do I compare balance transfer credit cards?

There are a number of features to look for when choosing a balance transfer credit card:

  • Balance transfer interest rate. This is the promotional rate that will be applied to the debt that you transfer. Most cards offer a 0% p.a. rate, but you can find cards offering higher introductory rates around 3% p.a.
  • Balance transfer promotional period. How long will this promotional rate apply? This is the balance transfer period and essentially how long you'll have to repay your debt before the introductory rate changes to a higher, standard interest rate. These periods can be between 3 and 24 months.
  • Fees. Check whether a balance transfer fee applies and also check whether you will need to pay an annual fee for the card.
  • Revert rate. All balance transfer cards have a revert rate, which is the rate that will apply to your balance after the promotional period ends. It's usually the cash advance rate and is usually around 20–22% p.a.
  • Standard interest rates. What is the purchase rate and is it competitive? If you're planning to keep the card after you repay your debt, this is good to check.
  • Balance transfer limits and restrictions. Confirm how much you are able to transfer. For some cards, you are unable to transfer a debt that will be more than 80% or more of your credit limit. You will also likely need to make the balance transfer at the time of application in order to take advantage of the promotional rate. Make sure you're familiar with all restrictions so you don't get any nasty surprises when you apply.

How do I compare debt consolidation personal loans?

When you compare options for debt consolidation personal loans, be sure to check the following:

  • Interest rate. First, check whether the rate is variable or fixed. Variable rates may change over your loan term while fixed rates remain, well, fixed. Once you know whether it's fixed or variable, compare that rate with other fixed or variable rate loans and ensure it is competitive. You should also compare the comparison rate as this includes the rate and fees.
  • Fees. What fees will you be charged? Check for upfront fees such as establishment or application fees as well as ongoing fees such as annual or monthly fees. These fees will add to your debt.
  • Loan limits. How much are you able to borrow and will it be sufficient to consolidate your debt?
  • Loan purpose. Not all lenders allow you to use their personal loans for debt consolidation, even if they are unsecured. Make sure you're able to use it for what you need before you apply.
  • Loan terms Check the terms of the loan and use a personal loan calculator to see if the repayments will suit your budget.
  • Repayment flexibility. Are you able to make extra repayments throughout the loan or pay off the loan early without penalty? Look for early repayment penalties or restrictions.

Christmas debt consolidation tips

  • Work out a budget beforehand. Know how much you can afford to repay before you consolidate your debt. This is especially true if you're applying for a balance transfer credit card – it can be easy to slip into making the minimum repayments and then not repaying your debt in full when the promotional period ends.
  • Check eligibility, restrictions and limits. First, find out if you meet the minimum eligibility criteria for the product you want. If you're unsure about anything, check with the provider directly. Then you should see how much you're able to transfer, and using a personal loan calculator or credit card calculator, see how much the repayments will be and if you'll be able to afford them. The lender will not approve you for a loan you can't afford so don't apply for it. Then, check the restrictions on the product – they may have a limit on how much you can balance transfer, for example.
  • Have a backup plan. What will you do if you aren't approved, or if you aren't approved for the full amount you need? Multiple credit applications in a short space of time can affect your credit file so it's important to have a plan in mind.

Balance transfer credit cards vs debt consolidation personal loans: Compare the benefits and drawbacks

What's good?What's not-so-good?
Balance transfer credit cards
  • As low as 0% p.a. interest on your debt
  • Can consolidate multiple cards and save on interest and fees
  • Some cards come with rewards and other perks which may make it worth keeping
  • You may not be approved for the full amount of credit you need to pay off your debt
  • The rate only applies for a limited time
  • If you don't pay off your entire balance within the promotional period, a revert rate will apply and it is usually 20–22% p.a.
Debt consolidation personal loans
  • Allows you to pay off your entire debt within the loan term
  • You can consolidate multiple debts, including credit cards and personal loans
  • You can also use the loan for additional purposes if you apply for a sufficient amount
  • Interest rates are higher than with balance transfer credit cards
  • Depending on the loan you apply for, you may not be able to make additional repayments or pay off the loan early without penalty
  • You will have your debt longer – debt consolidation personal loans come with minimum loan terms of one year

How do I know if I'm eligible?

It's important to check whether you are eligible for either the loan or the credit card before you apply. On every finder.com.au review page you will find a list of minimum eligibility criteria that you can check you meet before clicking "Go to Site" and submitting your application. Apart from this, you should also check the amount you're applying for will be manageable on your current budget.

Eligibility criteria will include:

  • Age. You will need to be over the age of 18 and may need to be over 21 to apply for some products.
  • Residency. Generally, you will need to be a citizen or permanent resident of Australia. However, you can find both personal loans and credit cards available for temporary residents.
  • Income. Some card providers and lenders have a minimum income which you need to earn in order to apply for the card.
  • Employment. There may be restrictions as to how you need to be employed. For example, you may need to be in full-time employment to be eligible.
  • Credit history. You generally won't be eligible for a balance transfer credit card with a bad credit history, but you may be able to find specialised bad credit debt consolidation loans.

Have more questions about consolidating your Christmas debt?

I applied for a balance transfer but wasn't approved for the credit limit I needed. What do I do?

You can either take out the balance transfer card and move as much debt as you can onto it, or decline to open the card. If you choose to open the card you will need to work out a budget to see how much you can pay off in the promotional period while still maintaining your other credit card/s. After you've paid that off you can choose to try for another balance transfer or just keep paying down your remaining debt.

Not taking out the card is also an option, but remember when you apply for another balance transfer the card provider will be able to see your recent application and it might affect your chances of approval.

What do I do if I have bad credit?

You won't be eligible for a balance transfer credit card, but you may have some personal loan options. Some lenders offer risk-based pricing based on your credit history, so while you may get a higher rate you may still be able to get a loan.

What do I do if I don't pay off the balance transfer within the promotional period?

First, work out how much debt you have left on the card and how long it will take you to pay off while you're being charged the revert rate. If it will be unmanageable or you will be in debt for an extended period of time, you may want to consider another balance transfer. Keep in mind that continually balance transferring your debt isn't an ideal strategy because every new credit application is listed on your credit file and affects your credit score. However, it depends on the current state of your credit file and how long it's been since you've last applied for credit.


Picture: Shutterstock

Was this content helpful to you? No  Yes

Related Posts

Personal Loan Offers

Important Information*
Harmoney Unsecured Personal Loan

Interest rates are tailored to each applicant individually, and start from as low as 6.99% p.a. to 26.95% p.a. based on your credit history.

SocietyOne Unsecured Personal Loan

Based on your risk profile, you will receive a tailored rate between 7.5% and 20.14% with a SocietyOne personal loan. Apply before 31 March 2018 to earn 2 Velocity Points for every $1 you borrow.

Pepper Money Unsecured Fixed Rate Personal Loan

Apply for up to $50,000 and receive conditional approval within minutes. Interest rates range from 9.99% p.a. to 21.49% p.a. The rate you are approved for depends on individual circumstances.

NAB Personal Loan Unsecured Fixed

An unsecured personal loan with a competitive fixed rate that you can make additional repayments to without penalty. Note: You must have held a NAB credit card or transaction account for at least 6 months before applying.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
Go to site