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Could debt consolidation work for you


Debt consolidation allows you to combine multiple debts (such as credit cards, store cards and personal loans) into a single loan with one repayment amount and interest rate. Here are some simple strategies to help you work out whether debt consolidation with an unsecured personal loan might help you reach your objectives.

1. Do the maths

While debt consolidation may be beneficial in certain situations, it's important to carefully consider if it's the right move for you.

Before you apply, review everything you pay to maintain existing debts, such as fees and charges, and compare them to those of the new loan. Remember to account for other costs that may be associated with consolidating your debts, such as break costs.

At the same time, work out how much interest you’re likely to pay across the life of your existing loans compared to the interest payable if you consolidate your loans. Bear in mind that a new loan might mean a longer loan term, which could cost you more in interest over the life of the loan. If the overall cost of existing debts is higher, you might benefit financially from consolidation.

2. Read the small print

Not many people actually enjoy reading terms and conditions, but it’s important for you to review them before you make a decision to consolidate your debts.

The small print can reveal useful features and help you understand all costs associated with a loan. For example, you might be charged an early repayment fee if you repay the total amount on a fixed rate loan before the end of its term. On the other hand, a loan might offer you the flexibility to make extra repayments or tailor repayment schedules.

Make sure you understand the loan’s features and conditions, and consider them when figuring out if it’s appropriate for you.

3. Focus on repayments

Debt consolidation can be a great way to simplify existing repayments by bringing them together in a single loan. Having just one repayment to manage could help you focus on making repayments and work towards ending the debt. Some loans may even allow you to make extra repayments from time to time; this helps you to reduce both the outstanding balance and the amount of interest you pay over loan's term.

Remember – debt consolidation is a tool. With the right approach and circumstances, you could use it to take control of your repayments and make things that little bit easier to manage.

Find out how much you could borrow

Read about our Unsecured Personal Loans

Important information

Credit criteria, fees, charges, terms and conditions apply. Terms and conditions available on request.

This information is prepared without knowing your personal financial circumstances. Before you act on this or any advice, please consider if it's right for you. If you need help, call 13 33 30.

© St.George Bank – A Division of Westpac Banking Corporation ABN 33 007 457 141
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