Debt Consolidation Loans Australia — Merge Debts Into One Payment
How debt consolidation works in Australia: combine credit cards, personal loans, and other debts into one loan with a single monthly payment and potentially lower interest rate.
What is Debt Consolidation?
Debt consolidation combines multiple debts — credit cards, personal loans, store cards, buy-now-pay-later balances — into a single loan. Instead of juggling several payments with different interest rates and due dates, you make one monthly payment.
When Debt Consolidation Makes Sense
Debt consolidation is worth considering when:
- You have multiple debts whose combined interest and fees are materially higher than a suitable consolidation loan
- You can qualify for a consolidation loan at a significantly lower rate
- You’re committed to not running up new debt while paying off the consolidation loan
- Your monthly cash flow improves meaningfully after consolidation
When It Doesn’t Make Sense
- The consolidation loan rate isn’t much lower than your current average rate
- Fees eat up the interest savings
- You’re extending the loan term so much that total interest increases, even at a lower rate
- The balance is small enough that establishment and ongoing fees outweigh the interest saving
Compare the Actual Offer
Australian lenders do not share one credit-score-to-rate table. Compare the personalised interest rate, comparison rate, fees, term and total repayments against every debt you plan to refinance. A lower headline rate can still cost more if the new term is longer or fees are high. Source: Moneysmart debt consolidation and refinancing, checked July 2026.
Steps to Consolidate
- List all debts: Balance, interest rate, minimum payment for each
- Calculate your weighted average interest rate
- Check your credit score
- Compare consolidation loan offers: Focus on comparison rate and total cost
- Apply and use the loan to pay off all other debts immediately
- Prevent the old balances returning — consider whether unused credit accounts should be closed, taking your circumstances and lender assessment into account
Risks
- Consolidation doesn’t erase debt — it restructures it
- Longer terms can mean more total interest paid
- Your home is at risk if you use a home equity loan for consolidation
- The biggest risk: consolidating, then running up new credit card debt on top