Let me guess—you've got three credit cards scattered across your wallet, a couple of Buy Now Pay Later plans haunting your inbox, and every month feels like you're playing financial whack-a-mole with repayments. Sound familiar?
You're not alone. Australians are collectively shouldering a staggering $41.96 billion in credit card debt, with the average card holder carrying around $3,454 at eye-watering interest rates hovering near 18.8% annually, according to Money.com.au's 2025 market analysis.
But here's the thing: there's a surprisingly straightforward escape route that thousands of Aussies are taking right now. It's called debt consolidation, and when done right, it can slash your interest payments by thousands while giving you back something priceless—peace of mind.
Debt consolidation means rolling multiple high-interest debts into one lower-rate loan. Instead of juggling five different repayments at varying rates, you pay off everything with a single personal loan, then focus on that one predictable monthly payment. Most Australians use this strategy to escape credit card rates around 20% by switching to personal loans in the single digits or low teens.
Think of it like this: you're essentially refinancing your expensive debt, much like homeowners refinance mortgages when rates drop.
Credit card interest rates have become almost comically brutal. Finder's latest reporting shows standard cards routinely charging 20% or higher. Meanwhile, the personal loan market has become fiercely competitive—if you've got decent credit, you might snag rates below 10%.
That gap? It's your opportunity.
And yet, millions of Australians keep bleeding money to credit card companies, often because they simply don't realise how much they could save. Or worse—they think consolidation is complicated. (Spoiler: it's not.)
Let's get concrete here. Say you're carrying $10,000 across a couple of credit cards at 19% interest. You're looking at roughly $366 monthly if you wanted to clear it in three years—with about $3,190 going straight to interest.
Now, imagine consolidating that into a 9% personal loan over the same period. Your monthly payment drops to around $319, and total interest? Just $1,470.
That's $1,720 back in your pocket. Enough for a decent holiday. Or half a year's worth of groceries. Real money.
Sure, these are illustrative numbers—your actual savings depend on the rates you qualify for. But the principle holds: lower rate equals less money burned on interest.
Here's what you're really comparing:
The personal loan forces discipline—and that's actually a good thing when you're serious about becoming debt-free.
Ready to make the switch? Here's your roadmap:
Grab a coffee (you'll need it) and list every debt. Credit cards, BNPL plans, that small loan from two years ago—everything. Note the balance, interest rate, and minimum payment for each. Yes, it might be painful. Do it anyway.
This number determines what rates you'll qualify for. The better your score, the lower your rate. Simple as that. You can check it free through various services—no excuses.
Compare at least three lenders. Look beyond the headline rate—check the comparison rate, which includes fees. Sites like RateCity and Canstar make this easier, but also check directly with banks and credit unions.
Once approved, use the loan funds to clear all those high-interest debts immediately. Don't be tempted to spend it on anything else. The whole point is debt elimination, not debt shuffling.
Literally. Freeze them in ice if you have to. The biggest consolidation mistake? Running up the cards again while paying off the loan. That's a fast track to double debt.
Use an app like WeMoney to monitor your progress. Seeing that loan balance drop each month? Surprisingly motivating. The app can connect to your accounts and show everything in one dashboard—no more logging into five different sites to check balances.
Let's be real—consolidation isn't magic. It won't help if:
Sometimes the problem isn't the interest rate—it's the spending. If that's you, consolidation might just delay the inevitable unless you also tackle the root cause.
Short answer: temporarily, maybe a tiny bit. The loan application triggers a credit check, causing a small dip. But here's the twist—paying off those maxed-out cards and making consistent loan repayments typically improves your score over time. Think short-term pinch, long-term gain.
Absolutely. BNPL might seem harmless with its "four easy payments," but when you're juggling multiple plans, it gets messy fast. Roll them into your consolidation loan and simplify everything.
You might still have options, just at higher rates. Some lenders specialise in bad credit consolidation. The rates won't be as attractive, but if they're still lower than your credit cards, you're winning. Consider it a stepping stone while you rebuild your credit.
It depends. Closing old cards can actually hurt your credit score by reducing your credit history length. Many people keep them open with zero balance—just don't use them. If you can't trust yourself, though? Close them. Better safe than sorry.
Before you apply for anything, tick these boxes:
Debt consolidation isn't rocket science, but it does require action. Every month you delay is another month feeding the interest monster.
Start simple: pull up your credit card statements right now and add up what you're paying in interest. Then hop onto a comparison site and see what personal loan rates you might qualify for. The difference might surprise you.
And if you're genuinely struggling? Don't go it alone. Moneysmart offers free guidance, and financial counsellors can help you navigate the maze without judgment.
Remember—the goal isn't just to shuffle debt around. It's to break free from it entirely. Consolidation is simply the tool that makes that journey faster and less expensive.
Your future debt-free self will thank you for starting today.
Note: Rates and figures quoted are based on 2024-25 market data and are indicative only. Your actual rates will depend on your credit profile and chosen lender. This article provides educational information, not personal financial advice.
This information is general in nature and does not take into account your objectives, financial situation or needs. It is not personal financial advice. Consider whether it is appropriate for your circumstances and seek independent advice before making financial decisions.
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