The contents provided on this page are for informational purposes only and do not constitute financial advice. Consider your personal circumstances and objectives before making any financial decisions.
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Dealing with a single repayment can be difficult enough, let alone trying to balance multiple repayments from separate providers.
Each repayment might be easily managed on their own but can become exponentially harder to deal with when combined into a big blob of bills. And this is before the regular demands of day-to-day life come in.
That’s where debt consolidation can help.
Debt consolidation simply means combining several debts into a single repayment plan with a single provider. For many people, this can make repayments easier to manage, bring a bit more structure to their finances, and reduce the mental load of managing a quintillion different payments.
Below are several practical options you might consider if you’re exploring how to consolidate debt in Australia.
Debt consolidation is the act of rolling many different debts into a single loan that is large enough to cover all the rest. Instead of managing several payments each month, each with their own terms and context, you replace them with one regular repayment.
For example, instead of paying:
You might consolidate them into one repayment of around $1860 per month with a single lender (depending on the loan structure and fees). You are turning 4 debts, 4 payments, 4 providers, 4 sets of logins, 4 sets of repayment instructions, into 1.
This doesn’t eliminate the debt itself but it can simplify how you manage it.
1) Use a personal loan to consolidate debts
One of the most common ways to consolidate debt is by taking out a personal loan and using it to pay off multiple smaller debts. These can be general personal loans or specific debt consolidation loans.
You then repay the personal loan in fixed instalments over an agreed period.
A personal loan may help:
Interest rates, fees, and approval criteria vary by lender, so it is important to compare options carefully before deciding.
Another option sometimes used for debt consolidation is a balance transfer credit card.
A balance transfer credit card, or simply balance transfer, refers to moving one or more credit cards to another, in order to take advantage of a limited time introductory offer or lower interest rate.
This could include offers such as 0% interest periods for balances transferred from other cards.
You transfer the balance from one or more credit cards to a new card and aim to pay it off or down during the promotional period.
Balance transfers may work best if:
If the balance isn’t repaid before the promotional period ends, standard interest rates usually apply. If you’re considering this option double check what the rate will be, just in case you don't pay off the full amount.
3) Refinance an existing loan
If one of your debts is already a loan, such as a car or personal loan, it may be possible to refinance the loan and include other debts in the new loan amount.
Refinancing means replacing an existing loan with a new one that has different (hopefully better) terms.
Some banks, like Bankwest, even offer the ability to consolidate smaller debts into larger existing loans (such as home loans), but whether this is ideal will depend on your situation.
Refinancing might help you:
Keep in mind that extending the loan term may increase the total cost of borrowing, even if the monthly repayment is lower.
4) Speak with your lenders about hardship or repayment plans
If your repayments have become difficult to manage, you might consider contacting your lenders directly to discuss repayment arrangements.
Many lenders offer hardship programs that may include:
This option doesn’t technically consolidate debts, but it can make multiple repayments easier to manage while you work toward paying them off.
You can find more information about financial hardship support through Moneysmart.
In some cases, the simplest approach may be not consolidating at all, but instead creating a structured repayment strategy to knock out debts sequentially.
Two common approaches are:
Snowball is about small changes to create a big impact. Focus on paying off the smallest debts first, while continuing to make the minimum payments on others. This can help provide a feeling of progress and momentum as debts are cleared one by one.
Avalanche is all about diving straight in with the most expensive debt first. Focus on paying off the obligations with the highest interest rate first, which may help reduce the total cost of borrowing over time. You might not have the small wins of the snowball, but will chip away at the most pressing cost.
Both strategies aim to help you stay organised and make consistent progress, but the best one for you will depend on your personal situation.
When you're focusing on repaying debt, it can also help to keep your day-to-day cash flow manageable.
Unexpected essential expenses—like a car repair or utility bill—can sometimes disrupt a repayment plan.In situations like this, some people explore short-term borrowing options to cover essential expenses while they continue working toward stronger finances.
For example, a Beforepay Pay Advance may allow you to borrow a smaller amount (up to $2000) and repay it over a short period, helping you manage temporary cash flow gaps.
Before choosing a debt consolidation option, it's wise to review a few key factors beforehand:
Look beyond monthly repayments and review:
If possible, try to avoid adding new credit while repaying consolidated debt.
A simple budget can help you determine how much you can realistically repay each month.
Check out our budget planner guide for more information on the different types of budgeting methods.
Managing multiple debts can feel overwhelming, especially when repayments are spread across different providers and due dates.
Learning how to consolidate debt can help you simplify repayments, organise your finances, and create a clearer path toward paying off what you owe.
The right option will depend on your situation—whether that’s a consolidation loan, balance transfer, refinancing, or simply restructuring your repayments.
Taking the time to review your options, compare costs, and create a realistic repayment plan can make a big difference over time. It’s all about the progress!
In the meantime, if you need a little extra financial support, the Beforepay Pay Advance is here to help, with fast loans of up to $2000, with no credit checks.
How Pay Advance Works
Further reading: It can be hard to feel like you’re making financial headway, especially with the cost of living being so high, but here are 5 signs you’re making progress with your money.
Debt consolidation may help simplify repayments and improve organisation, but it doesn’t reduce the amount owed by itself. Whether it’s suitable depends on your financial situation, interest rates, and repayment capacity.
In many cases, BNPL balances and credit card debt can be consolidated through a personal loan or refinancing arrangement, though eligibility will vary by lender.
Applying for new credit may temporarily affect your credit score. However, successfully managing repayments over time can help improve your credit history.
For many people, a personal loan consolidation is one of the simplest approaches because it replaces multiple debts with one repayment. However, it’s important to compare lenders and understand the loan terms first.
If consolidation isn’t suitable, you might consider strategies such as budgeting, prioritised repayment plans, or discussing hardship arrangements with lenders.
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