💳 Debt Consolidation Personal Loans

Many Australians use personal loans to consolidate credit card debt into a single, structured repayment. This page explains how debt consolidation works, why credit card debt can be difficult to clear, and how a personal loan may help you regain control.

🧠 What Is Debt Consolidation?

Debt consolidation involves combining multiple existing debts into a single loan with one repayment. This often includes credit cards, store cards, and other personal loans.

Instead of managing several balances, interest rates, and due dates, a debt consolidation personal loan allows you to focus on one structured repayment over a fixed term.

🔄 Why Credit Card Debt Can Be Hard to Pay Off

Credit cards are a form of revolving credit. This means the balance does not naturally reduce over time unless repayments exceed the interest and ongoing spending.

When only minimum repayments are made, a large portion of the payment can go toward interest rather than reducing the balance. This can result in debts lingering for years, even when regular payments are made.

In addition, having available credit can make it easy to re-use the card, which can undo progress made toward paying the balance down.

🔒 How a Personal Loan Can Help Close Off Credit Card Debt

A personal loan used for debt consolidation converts revolving credit card balances into a closed-end loan. This means the loan has a defined start, end, and repayment schedule.

Once credit card balances are paid out using a personal loan, those accounts can be closed or left unused, removing the temptation to re-borrow. Repayments are fixed and structured, making it clearer how long it will take to become debt-free.

For some borrowers, personal loans interest rates may be lower than credit card rates. Even where rates are similar, the structured repayment term can help ensure progress is made toward clearing the debt.

⚠️ Important Things to Consider

• Consolidating debt does not remove the need for disciplined spending
• Extending loan terms can increase total interest paid over time
• Fees and charges may apply depending on the lender
• Closing or reducing credit limits may help prevent re-accumulating debt

🔄 Alternatives to Debt Consolidation Loans

Other approaches may include balance transfer credit cards, negotiating hardship arrangements with lenders, or using existing home loan features such as redraw or offset accounts. Each option has different implications and may suit different situations.

🤝 How We Help With Debt Consolidation

If you’re considering using a personal loan to consolidate credit card debt, we can help you compare options and understand how consolidation may work in your situation.