Everything you need to know about debt consolidation 

Debt Consolidation

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Team MONEYME|01 August 2023| 3-minute read

Got more than one debt? Struggling with juggling multiple repayment deadlines?  

It might be time to consider debt consolidation.  

What is debt consolidation? 🤔 

Simply put, consolidating your debt means rolling all your debts into one.  

In practice, a single provider takes over all your debts. So, instead of dealing with the demands of many providers, you deal with just one. 

What should you consider before consolidating your debt? 💭 

Before jumping into consolidating your debt, there are a few things to think about. 

First, determine whether consolidation will put you in a better financial position.  

Do this by calculating how much you’d pay in total over the lifetime of the loans, credit cards and buy now pay later accounts you have  – then compare this to the costs of a debt consolidation loan. Be sure to include all interest and all charges, such as exit fees and application fees.  

You can get your debt consolidation rate (without impacting your credit score) here. 

It’s also a good idea to work through your alternatives.  

For example, if you’re experiencing financial difficulty, your current providers might let you decrease or pause repayments for a while under a financial hardship arrangement.  

The benefits of debt consolidation 😻 

The benefits of debt consolidation often outweigh the disadvantages.  

Making a change can help you keep on top of repayments and potentially score a better interest rate.  

Keep on top of repayments more easily 🌟 

Once you consolidate your debt, you make repayments to one provider only. 

Instead of working out how to meet multiple deadlines, you only need to worry about a single, fortnightly or monthly repayment. This can make life less complicated and budgeting easier.  

It might also mean you’re less likely to make late or overdue repayments, which can have a negative effect on your credit score.  

In contrast, timely repayments can nudge your score upwards.  

Score a better interest rate 🙌🏻 

Debt consolidation often provides you with a better overall interest rate.  

This is even more likely if your credit score has improved since you took out your current loans. Check your score for free here.  

If your score hasn’t improved, you can take some steps to give it a boost. 

Before signing up with any provider, make sure you take the time to read the fine print. Find out how long the promised interest rate will apply, if there are any fees, and what your repayment plan would look like.  

Is it time to consolidate? ⏳ 

This depends on your debts. 

If you’ve weighed up the risks and researched carefully, now might be the right time. Debt consolidation can help you take better control of your finances and pay less interest in the long term.