Pros and cons of debt consolidation

Credit card debt can sneak up on your before you know it. Christmas time hits, bills come in all at once or personal circumstances arise which leave you with empty pockets. There are ways to get yourself out of the scary black hole by consolidating your debt.

Credit card consolidation isn't always restricted to credit cards. The other popular option is using personal loans to pull together all of your debts under the same rate and account.

The same old story is that every credit card user becomes overwhelmed with debt after the Christmas period, which is when balance transfer and consolidation deals start flooding the market.

Desperate for an easy way out of their high interest repayments, credit card consolidation becomes a standard option for spenders. But not everyone weighs up their options before making the leap to a new loan.

Credit Cards


  • With ease of access to funds, and effortless management of your balance, a balance transfer card becomes the first choice for many looking for elbow room in a loan.
  • Introductory rates are a top reason for picking the balance transfer option. Just make sure that you pay off the debt before the period is over.
  • Frequent Flyer rewards and other discounts can tempt many to choose credit card consolidation.


  • Unlimited debt: Lenders can be very proactive with increasing your limits, allowing yourself to dig further into debt.
  • No repayment schedule: Card holders who only repay the minimum requirement can take years to pay off small loans.
  • Premium rates: Many balance transfers may revert to high rates after the introductory period.

Personal Loans


  • Regular repayments allow borrowers to predict when their debt would be paid off.
  • A debt ceiling stops your debt from increasing if you ever get the urge to buy more on credit.
  • Fixed personal loans may offer lower rates when you have committed to paying off your debt over a set period.


  • Inflexibility: The terms of the loan are often set, and redraw options may not be available.
  • Application fees: These fees and missed repayment fees can cost you hundreds if you're not careful.

There's plenty to compare when it comes to credit card consolidation. Just check out the cream of the crop at RateCity and give yourself some of the lowest rates and fees in the country .

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