How do I consolidate my credit card debt to a personal loan?
Consolidating your credit card balance can save you thousands in interest. Find out what's involved and compare your options.
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Credit cards offer you a convenient way to spend, but they can leave you with a hefty bill at the end of the month. That's where a credit card debt consolidation loan can come in. A credit card debt consolidation loan is essentially a personal loan that you use to pay off your credit card debt. This will reduce your repayments to a single bill, and normally also help to slash your interest.
What's in this guide?
- Why should you consider consolidating your credit card debt to a personal loan?
- Unsecured personal loans that could help you consolidate
- How to compare your personal loan options
- Consolidating your credit card debt: personal loan vs balance transfer
- Credit card debt consolidation loans: what to keep in mind
Why should you consider consolidating your credit card debt to a personal loan?
Here are the main benefits to keep in mind:
- Reduce the interest you're paying. Interest rates differ, but personal loan interest rates are typically lower than credit card interest rates.
- Have a fixed repayment period. Credit cards are ongoing lines of credit, while personal loans give you a fixed date to repay your debt.
- Access finance for other purposes. You can also use the personal loan to make other large purchases or to finance any other purpose you need.
Unsecured personal loans that could help you consolidate
For more information on any of these loans, simply click "More Info" to be taken to our review page. To apply for a loan, click "Go to site".
How to compare your personal loan options
If you're considering a credit card debt consolidation loan, you have a few options available. Here's what to keep in mind when comparing:
What is the interest rate?
You need to check how competitive the interest rate is. Which lenders are offering the lowest rates? Remember to also check the comparison rate, as this takes into consideration any mandatory fees included in the loan. Checking the comparison rate gives you a more accurate idea of what you'll have to pay. You should also check whether the rate is fixed or variable. A fixed rate means your repayments will remain the same for the duration of the loan. A variable rate may fluctuate.
What fees will I be charged?
Some fees to watch out for with a credit card debt consolidation loan:
- Upfront fees. These include establishment and application fees.
- Ongoing fees. Monthly or annual administrative fees may also be charged.
- Additional repayments. Some lenders may not allow additional repayments, others may charge a fee.
- Early payout/Break fee. Paying off a loan early can incur hefty fees in some cases.
- Redraw fee. Loans with redraw facilities can be handy, but some lenders may charge a fee for this service.
- Late payments and default fees. Most lenders charge for late payments and defaults, so check that these fees aren't extortionate. Especially if you know yourself to occasionally slip up and miss payments.
How much can I borrow?
Ensure the loan amounts on offer will be sufficient to cover your credit card debt. Unsecured personal loan lenders typically offer between $5,000 and $80,000, but some offer lower and higher amounts. Keep in mind that you will need to meet the lender's criteria if you want to be approved for a higher amount credit card debt consolidation loan.
Am I eligible?
The minimum eligibility criteria will be listed on the finder.com.au review pages. Once you click "Go to site", you can also confirm these criteria before submitting your application. It's only ever worth comparing loans that you are eligible for. Remember that meeting the minimum criteria does not guarantee you will be approved; each application is judged on a case-by-case basis and your approval depends on your ability to afford the loan repayments.
Consolidating your credit card debt: personal loan vs balance transfer
Getting a credit card debt consolidation loan in the form of a personal loan isn't the only solution to credit card debt. There are a few different ways that you can consolidate credit card debt. For example, you could also apply a balance transfer credit card. But how does a personal loan compare to a balance transfer?
- Have a set repayment period to pay off your entire debt
- Enjoy a low interest rate
- Personal loans may come with more upfront fees than credit cards
- Your interest rate will be higher than on a balance transfer credit card
Balance transfer credit card
- Have a promotional period where you will pay 0% p.a. interest
- Credit cards can offer rewards points, no annual fees and other perks
- If you don't pay off the balance in the promotional period, the revert rate will likely be over 20% p.a.
- Balance transfer restrictions may apply. For example, you may not be able to transfer more than 80% of your credit limit on some cards.
Credit card debt consolidation loans: what to keep in mind
Applying for any form of credit is not a decision that should be taken lightly. Make sure you've compared all of your credit card debt consolidation loan options before applying. Comparing options ensures that you are as informed as possible, and able to pick a loan which best meets your needs.
You can use a personal loan calculator to get an idea of what your repayments will be, and see if it will be manageable on your budget.
Consolidating your credit card debt to a personal loan can save you money. However, you should only apply after comparing your options and deciding it's the right debt management option for you to take on. If you have found a loan that suits you, simply click "Go to site" to visit the lender's website, where you can find out more information and submit an application.
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Personal Loan OffersImportant Information*
You'll receive a fixed rate between 6.99% p.a. and 25.69% p.a. based on your risk profile.
Apply for a loan up to $50,000 and repay your loan over 3 or 5 years terms.
You'll receive a fixed rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
You'll receive a fixed rate between 6.99% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
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 to use for a range of purposes. Make additional repayments or pay off the loan early, penalty-free.
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