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Debt Consolidation

Ready to save on interest and fees? Here's how to consolidate debt and get back in control.

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If you're looking for a better way to manage the money you owe, you're not alone. Research conducted by YouGov in January 2020 reveals that 61% of working Australians are in debt (outside of home loans) and 40% have considered debt consolidation1.

Debt consolidation is an option when you have multiple or high-interest debts (loans, credit cards, etc.) and you want to reduce the interest and fees you're paying. This guide will take you through your options to consolidate your debts – including options for if you have bad credit. Keep these three things in mind as you're reading:

  • Make sure you will actually end up paying less
  • Don't make too many sacrifices – protect your assets
  • Avoid debt consolidation companies that make "too good to be true" promises

Finding the right debt consolidation option for you

The best way to consolidate your debt will depend on how much you owe, what type of debt it is, your financial situation and your eligibility for each option. The sections below will guide you through consolidating debt.

Debt Consolidation Personal LoanBalance Transfer Credit CardMortgage Refinancing
SummaryTake out a new loan with a lower rate and move the debt across.Transfer loan or credit card debt to a new card with a 0% interest rate.Use the equity in your home as a line of credit to pay off your debt.
CostPay around 12% p.a. up to 7 years with no or low feesPay 0% for about 2 years with no or low feesPay about 5% for as long as you need with higher fees
Suited for debt amounts$8000 to $50,000$500 to $8,000$40,000 +
Good for credit card debt?🟡🟢🔴
Good for personal loan debt?🟢🟡🟠
Good for both card and loan debt?🟢🟢🟠

Compare debt consolidation options

You can compare loans, credit cards and home equity options for debt consolidation side by side in the tables below.

1 - 6 of 6
Name Product Mobile details underline Interest Rate (p.a.) Comp. Rate (p.a.) Rate Type Application Fee Monthly Fee Monthly Repayment
OurMoneyMarket Personal Loan Fixed, 1 - 7 Years, $2,001 - $75,000
OurMoneyMarket Personal Loan
1 - 7 Years, $2,001 - $75,000
to 20.99%
to 23.83%
1.50% - 6%
min. $250
You'll receive a fixed rate from 5.65% p.a. to 20.99% p.a. based on your risk profile.
A personalised loan from $2,001 to $75,000 that varies based on your credit history and financial situation.

Finder Exclusive: Apply before 30th of June 2022 to secure a 0.20% p.a. discount for the full term of your loan.
Wisr Personal Loan Fixed, 3 - 7 Years, $5,000 - $64,000
Wisr Personal Loan
3 - 7 Years, $5,000 - $64,000
to 17.95%
to 18.37%
You'll receive a fixed rate between 6.95% p.a. and 17.95% p.a. based on your risk profile
A loan from $5,000 that charges no fees for extra or early repayments. Keep in mind security is required in some cases.
NOW Finance No Fee Unsecured Personal Loan Fixed, 18 Months - 7 Years, $5,000 - $50,000
NOW Finance No Fee Unsecured Personal Loan
18 Months - 7 Years, $5,000 - $50,000
to 19.95%
to 19.95%
You'll receive a fixed rate between 5.95% p.a. and 19.95% p.a. based on your risk profile
Borrow from $5,000 to $7,999 with loan terms between 18 months and 3 years or borrow $8,000 to $50,000 with loan terms between 18 months and 7 years.

Latitude Variable Rate Personal Loan Variable, 2 - 7 Years, $5,000 - $70,000
Latitude Variable Rate Personal Loan
2 - 7 Years, $5,000 - $70,000
to 25.99%
to 29.20%
0% - 5%
You'll receive a variable rate between 5.75% p.a. and 25.99% p.a. based on your risk profile
Apply for what you need from $5,000 and use it for a range of purposes. Repay weekly, fortnightly or monthly. You can check your interest rate before applying with no impact to your credit score.
Great Southern Bank Unsecured Fixed Rate Personal Loan Fixed, 1 - 7 Years, $5,000 - $65,000
Great Southern Bank Unsecured Fixed Rate Personal Loan
1 - 7 Years, $5,000 - $65,000
You'll receive a guaranteed rate of 9.39% p.a. with a comparison rate of 9.64% p.a. if you're approved.
An unsecured loan from $5,000 with flexible repayments and no monthly fee.
Great Southern Bank Unsecured Variable Rate Personal Loan Variable, 1 - 7 Years, $5,000 - $75,000
Great Southern Bank Unsecured Variable Rate Personal Loan
1 - 7 Years, $5,000 - $75,000
You'll receive a guaranteed rate of 11.89% p.a. with a comparison rate of 12.15% p.a. if you're approved. Note: This rate may vary during the loan term.
Borrow from $5,000 with the option for flexible repayments and no monthly fees.

Compare up to 4 providers


Fox Symes Debt Solutions

Fox Symes offers a range of debt consolidation options to help you if you're struggling with multiple debts.
1 - 7 of 27
% p.a.
Name Product Balance transfer rate p.a. Purchase rate p.a. Annual fee Amount saved
Citi Clear Card - Balance Transfer Offer
0% for 36 months
$49 for the first year ($99 thereafter)
Offers 0% p.a. on balance transfers for 36 months with no balance transfer fee. Plus, a first-year annual fee discount and complimentary insurance covers.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
0% for 28 months
$0 for the first year ($129 thereafter)
Get 0% p.a. on balance transfers for 28 months (with no BT fee). Plus, $0 annual fee in the first year. Ends on June 30.
Qantas Premier Platinum
0% for 18 months with 1% balance transfer fee
$225 for the first year ($299 thereafter)
Earn 80,000 bonus Qantas Points when you spend $3,000 in the first 3 months and save with a reduced first-year annual fee.
Citi Clear Card - Cashback Offer
0% for 15 months
$49 for the first year ($99 thereafter)
Get $250 cashback when you spend $3,000 in the first 90 days. Plus, free wine when you dine and purchase insurance cover.
Citi Rewards Card - Flybuys Offer
0% for 15 months with 1% balance transfer fee
$49 for the first year ($149 thereafter)
Get 40,000 bonus Flybuys points (worth $200 Flybuys dollars) when you spend $3,000 in the first 90 days. Plus, a $49 first-year annual fee.
Citi Premier Card - Cashback Offer
0% for 6 months
$150 for the first year ($300 thereafter)
Receive $600 cashback when you spend $2,000 through Apple Pay or Samsung Pay in the first 90 days. Plus, save with a $150 first-year annual fee discount.
Virgin Australia Velocity Flyer Card - Bonus Points Offer
0% for 18 months
$64 for the first year ($129 thereafter)
Get up to 60,000 bonus Velocity Points on eligible spending. Plus, a reduced first-year annual fee and a yearly $129 Virgin Australia Gift Voucher.

Compare up to 4 providers

1 - 2 of 2
Name Product Comparison Rate Fees Monthly Payment

Well Money Equity Plus
Principal & interestOwner-occupier40% min. deposit
Principal & interestOwner-occupier40% min. deposit
Interest Rate
  • Application: $250
  • Ongoing: $0 p.a.
Borrowers with 40% deposits or equity can get this low variable rate loan. 100% offset account included.

Bank First Equity Line of Credit
Principal & interestInterest onlyInvestment20% min. deposit
Principal & interestInterest onlyInvestment20% min. deposit
Interest Rate
  • Application: $300
  • Ongoing: $300 p.a.

Compare up to 4 providers

How does debt consolidation work?

Debt consolidation involves taking out another credit account (personal loan, credit card or home equity loan) that combines your existing credit accounts into one. This helps to reduce the amount of fees and interest you're paying.

Questions to ask before consolidating your debt

  • What are your current monthly repayments? To make sure the new debt consolidation product you're applying for is helping you to pay less across your debts, you need to know how much you're paying. Pull up all of your bank statements or all of your separate bills for your credit accounts and add up how much you pay each month.
  • How much are you paying in interest and fees? The primary benefit of debt consolidation is reducing what you're paying in interest and fees. Check your interest rates and fees for each of your accounts to ensure your new debt consolidation account will be less.
  • Will you be eligible? While there are definitely benefits to debt consolidation, there is no certainty as to your eligibility. There is also no certainty as to whether you'll be approved for the full amount you need to cover your debts. Check the minimum eligibility criteria, your credit file and the minimum and maximum allowable limits for the debt consolidation option you want. If in doubt, ask the provider directly.
  • Will an exit fee or penalty apply to any of your current credit accounts? Some personal loans may charge you a penalty to repay your loan early. If a fee does apply to your loan, you need to ensure you're still able to save with debt consolidation when you have to pay this fee.
  • What is your credit like? Credit providers go through your credit file and can check your credit score to assess your risk and decide whether you're likely to make your repayments. You can get a copy of your credit report for free. Order it and make sure the information is correct and that you have a good idea of your financial position.

Option 1: Debt consolidation personal loans

  • For personal loan debt. This is one of the most common ways people choose to consolidate/refinance their existing personal loan debt. It simply involves taking out a new personal loan with a lower interest rate and fees than your current one and transferring your debt across.
  • For credit card debt. If you don't mind paying some interest in exchange for a regular payment structure and longer payment terms, this may be an option. This involves you applying for a lump sum to cover your credit card debt and then using that money to pay your card's balance off. This is a good option if you have more than a few thousand dollars worth of debt and you likely wouldn't be able to move the full amount to a new credit card.
  • For personal loan and credit card debt. You can apply to consolidate both personal loan and credit card debt at the same time with this type of loan. You should first work out how much you're paying across all of your accounts. You also need to factor in any exit or early repayment fees.

Option 2: Balance transfer credit cards

  • For personal loan debt. A handful of credit card providers (Citi, Virgin Money, Qantas Money and Coles) allow you to balance transfer personal loan debt. This allows you to apply for a new credit card and transfer the loan debt onto the card. You'll then pay a promotional 0% p.a. rate for a limited period of time on the debt, after which a standard rate (usually above 20% p.a.) will apply. Most credit cards only allow you to transfer about 80% of your approved credit limit, so even being approved for a $10,000 credit limit means you may only be able to transfer $8,000 and anything more than that $8,000 would still be left on your loan. Make sure you can transfer enough to make this worthwhile.
  • For credit card debt. This is the most common way to consolidate credit card debt. It involves the same process as consolidating personal loan debt where you apply for a new card and move what you already owe onto it and save with a low or 0% rate.
  • For personal loan and credit card debt. You can apply to consolidate both personal loan and credit card debt at the same time on cards from the providers listed above. Make sure the balance transfer limit is high enough for you to transfer what you need.

Option 3: Refinancing through your mortgage

  • For personal loans, credit cards and both. If you have a mortgage, you also have the option of taking out a home equity loan to consolidate and pay off your other debts. With this type of loan, you'll have to pay interest, up-front fees and usually ongoing fees as well. Also keep in mind that while this option can seem cheaper due to the low rates home loans can offer, it is risky, difficult to manage and has no end-date. This can offset any savings earned with higher interest in the long run, so make sure you do the maths. Home equity refinance should only be used if you can be disciplined about your repayments and build your equity back relatively quickly.

How to consolidate debt when you have bad credit

While your options are much more limited when you have bad credit, debt consolidation is still possible. When entering into bad credit debt consolidation, it may involve entering into a Part 9 Debt Agreement, which is a form of bankruptcy. However, there are other options available; it just may involve a higher interest rate being applied to your loan to offset the risk you represent as a bad credit borrower.

  • Part 9 Debt Agreement. A Part 9 Debt Agreement is an agreement between you, the lender and your creditors to pay a certain sum of money to your creditors. Once all the parties agree, your debts will stop accruing interest, any civil actions are frozen and creditors can't pursue you. Keep in mind this agreement may result in you losing secured assets, and you will have trouble accessing credit while you're repaying the amounts as per the agreement.
  • Bad credit debt consolidation loan. This is an unsecured debt consolidation loan that is available to bad credit borrowers. It allows you to consolidate your debts, including credit cards and personal loans, and may allow you to save interest and fees. Keep in mind a higher interest rate will apply than with good credit debt consolidation loans as you are considered a riskier borrower.

How much could you save with a debt consolidation loan?

  • Standard Personal Loan: Say you have $20,000 worth of personal loan debt you're looking to consolidate. You're currently paying 19.99% p.a. interest over a loan term of 5 years, making monthly payments of $540 plus $10 in monthly fees. At the end of these 5 years, you'll end up paying over $12,300 in fees and interest alone!
  • Debt Consolidation Loan: Now let's say you've landed on a debt consolidation loan for that $20,000. The new loan charges 11.99% p.a. interest over the same loan term of 5 years and doesn't charge a monthly fee. This means your monthly payments work out to $455 and at the end of it, you'll have paid $6,687 in fees and interest.

By consolidating your debt and choosing a product with a lower rate and fees, you could save $5,699. Now, all of this is dependent on your risk profile and eligibility, so make sure you compare your options, read the details and know exactly what you're signing up for.

The good and the bad of consolidating debt

The benefits

  • Save money. By rolling your debts into one account, you eliminate the separate fees you're paying and are also likely to reduce the amount you're paying in interest.
  • Simplify your debts. Debt consolidation gives you one lender to deal with, one set of fees to track and one interest rate to remember.
  • Prevent damage to your credit file. A consolidation loan gives you a clear set path to paying your debt off. You might be able to avoid bankruptcy and you can avoid defaulting on your current debt.

What to be aware of

  • Risk of rejection. Applying for a new debt consolidation account will leave a hard enquiry on your credit file. Read the eligibility criteria and make sure you meet them.
  • Confusing jargon. Watch out for certain "debt consolidation solutions" that are actually a Part 9 Debt Agreement and involves you entering into a form of bankruptcy.
  • High rates and fees for bad credit borrowers. These loans carry higher rates and fees, so bad credit borrowers need to be especially wary when applying.

Debt collectors: What you need to know

Your rights

Even though you may have bad debts, you also still have rights. There are laws that control what debt collectors can and cannot do.

  • They cannot excessively harass, threaten or bully you, and collectors are supposed to only contact you during certain hours of the day (7:30am–9:00pm on weekdays and 9:00am–9:00pm on weekends). Keep a log of the dates and times you are contacted along with any other specifics. This will come in handy if you end up having to file a complaint, which you can do by contacting a consumer protection agency such as the Australian Competition and Consumer Commission (ACCC).
  • Check your bill records if collectors are calling you. Ask for a detailed statement of what they say you owe. If the debt involves a loan, ask for a copy of the paperwork. A collector must always identify themselves and state the reason they are contacting you. They should be prepared to provide you with account information and should offer a repayment or settlement plan.
  • Figure out what you must spend to get by, such as food, shelter, car, utilities, etc. It is good practice to set up an appointment with a non-profit debt counsellor before making any promises or commitments to a collector.
  • Certain credit brokers and credit providers in Australia operate illegally without licenses, so make sure you're dealing with a licensed individual or organisation. To check, you can go through ASIC Connect's Professional Registers or call ASIC's infoline.

What happens if your application is rejected?

If your application is rejected, then you should wait to apply again. Generally, waiting between three and six months to apply with another provider will be a lower risk than applying straight away. If you have serious concerns about your debt, you have Part 9 Debt Agreements (a form of bankruptcy) as a last resort.

In the event that a provider rejects your application for credit, bear in mind that not all is lost. Before you apply for credit, there are a few things you can do to improve your chances of being approved. For example, you can start by going through your credit report to ensure you have a good credit score. If you're concerned about your application, you could also work on reducing your debt for a period of time so you don't have to apply for as high a limit and then work on reducing debt with a budget.

FAQs about debt consolidation

My current bank offers debt consolidation loans. Should I just apply with them?

Applying with your current bank has some advantages, but you should still compare the options available to you before you apply. If you have a few negative listings on your credit file and have a strong past relationship with your bank, you may have a better chance of being approved with them than with another lender. This is, of course, if your account has been kept in good standing. It still helps to compare the options you may be eligible for so you're aware of the debt consolidation possibilities in the market.

Should I consolidate my debt into my home loan to save having to take out another loan?

As we've outlined above, if you have equity in your home, you can consider adding your debt to your home loan by refinancing.

There are a few considerations before doing this and it may very well not be the most sensible option.

First off, while the interest rate might be lower, the debt will likely be spread out over a much longer period as home loans have longer terms than standard personal loans. The costs of refinancing should also factor into your decision.

Do I need to change my budget and spending when I consolidate my debt?

If you are taking out a traditional debt consolidation loan, then you don't have to change your budget, although this can help you get out of debt sooner. A debt consolidation loan should offer a reduction in the amount you pay in interest, which in turn reduces your monthly repayments.

If there are no fees for making extra repayments, you could put the money you save towards your loan to help pay down your debt more quickly.

You might also want to review your current budget and see if there's any ongoing expenditure you can cut back on so you can put more towards your loan. If you choose to enter a debt agreement, there may be budget and spending restrictions depending on the nature of your agreement.

What's the difference between a debt consolidation loan and a debt agreement?

A debt consolidation loan is a type of personal loan that allows you to combine your current debts such as loans and credit cards into one. These loans can help reduce the amount you're paying in interest and fees and also make your debt easier to manage with one simple repayment.

A debt agreement, on the other hand, is a binding agreement that is an actual act of bankruptcy. It will be listed on your credit file and affect your ability to access credit later on.

Debt agreements are serious contracts to consider and the decision shouldn't be taken lightly. You should only consider this option when you find your debt unmanageable but don't want to enter into bankruptcy – you will agree to pay your debtors a certain amount of money that you can afford.

I am anxious about my debt and don't know what to do. Who can I talk to?

Debt anxiety is a common concern especially if you're finding your debt overwhelming or unmanageable. If you're unsure whether a debt consolidation loan is right for you or you want some advice on your personal situation, you can get in contact with a free financial counsellor on 1800 007 007.

There are free credit and debt services available in every state and they can help you decide your best course of action.
1Debt fret - YouGov study commissioned by ING.

More guides on Finder

Personal Loan Offers

Important Information*
Logo for Citi Personal Loan Plus
Citi Personal Loan Plus

You'll receive a variable rate of 8.9% p.a. with a comparison rate of 9.18% p.a. if you're approved.
A credit limit up to $75,000 that you can continue to draw down over terms up to 5 years.

Logo for OurMoneyMarket Personal Loan
OurMoneyMarket Personal Loan

You'll receive a fixed rate from 5.35% p.a. to 20.99% p.a. based on your risk profile
A personalised loan from $2,001 to $75,000 that varies based on your credit history and financial situation.

Logo for ANZ Fixed Rate Personal Loan
ANZ Fixed Rate Personal Loan

You'll receive a guaranteed rate of6.49% p.a. with a comparison rate of 7.41% p.a. if you're approved.
Apply for up to $50,000 to use for a variety of purposes without needing to add security. Available to self-employed applicants.

Logo for NAB Personal Loan Unsecured Fixed
NAB Personal Loan Unsecured Fixed

You'll receive a fixed rate between 6.99% p.a. and 18.99% p.a. ( 7.91% p.a. to 19.83% p.a. comparison rate) based on your risk profile
Borrow from $5,000 to $55,000, with 1 years to 7 years loan terms available. This loan comes with no fees for extra repayments and no early exit fees.

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