How to consolidate your credit card debt

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Do you have a couple of credit cards which plague you with constant reminders of outstanding debt? Trying to manage your debt when it’s coming from every angle can be difficult, not to mention costly.

Less can be more when it comes to credit cards. Spreading your debt across different credit cards may make it harder for you to manage, and means you will be accruing more interest rate charges.

If you are feeling stuck between a rock and a hard place and want to break your credit card debt, there are a couple of options you can consider. But it pays to do your research, particularly if you have bad credit. 

What is debt consolidation and why should I do it?

Credit card debt consolidation is when you combine your multiple existing credit card debts into one to better manage your repayments and minimise the amount of fees and interest you’re paying. This is usually done through a debt consolidation personal loan or a balance transfer credit card.

However, you should ensure the consolidated debt’s interest rates and/or fees are not higher than what you were paying on your previous debts.

How do I consolidate my credit card debt?

There are two main options you can consider when you need to consolidate your credit card debt; a balance transfer credit card or a debt consolidation personal loan.

  1. Balance transfer credit card – this involves moving your debt(s) into a new credit card with (ideally) a lower or no interest rate for a set period of time. This gives you some much needed breathing room to get back on your feet and pay down your debt.
  2. Debt consolidation personal loan – this involves moving your debt(s) into a personal loan with (ideally) a lower interest rate than credit cards, and a fixed term so you’ll be encouraged to pay off the debt through minimum repayments. If you have multiple credit card debts, this helps to simplify your repayments. Learn more about bad credit personal loan options here

Which credit cards can consolidate debt?

Balance transfer credit cards are designed to help you consolidate your credit card debt. Some lenders will also allow you to include debt from personal loans, however the overall debt cannot exceed the credit limit on your new card.

Balance transfer credit cards help by allowing you to transfer your debt to a credit card that charges a lower interest rate and lower fees. They can also offer a honeymoon period with no interest or a reduced rate, providing much needed breathing room to begin to pay back your debt.

The best practice to avoid growing more debt is to freeze your balance transfer credit card the moment you get it and budget effectively so you start paying the debt off. Making any new charges on top of your existing debt will see you hit with interest on that new purchase straight away.

Also, keep an eye on the length of your honeymoon period and post-honeymoon interest rates, as the balance transfer credit card may revert to a higher interest rate than your previous ones when this introductory period expires. Similarly, the balance transfer card may have higher fees and charges after this honeymoon period.

  • Honeymoon rates
  • Lower interest rates
  • Less fees
  • If misused, you’ll grow debt
  • Post-honeymoon interest rates could be higher
  • Post-honeymoon fees could be higher

Who offers debt consolidation credit cards in Australia?

There are a wide range of Australian lenders, including major banks, credit unions and mutual banks, who provide balance transfer credit cards to help consolidate credit card debt.

The best way to find a balance transfer credit card that suits your financial situation is to utilise comparison tools, such as’s comparison table or balance transfer calculator. This allows you to filter through a range of search options that are tailored to your specific financial needs, such as interest rates, features and fees.

How do I get a debt consolidation credit card?

  1. Use’s comparison tools to search and compare the most competitive balance transfer credit card and for your financial needs.

  2. Use’s balance transfer calculator to ensure you’re choosing the product that will save you the most money and/or help you pay off your debt in the most suitable time frame.
  1. You need to complete the standard application process for your new credit card. Ensure you check your eligibility before applying, and try to present yourself as an ideal borrower, particularly if you have bad credit.

  2. Provide your new credit card company with the details of your original account(s), so the balance can be transferred.
  1. Cancel your old credit card. This prevents you from being charged additional fees, and helps you quell the temptation to use it and grow more debt.

Can I use a credit card to consolidate debt if I have bad credit?

Your approval for a balance transfer card depends on your credit history and reliability as a borrower. If you want to use a balance transfer credit card to consolidate debt, but aren’t secure that your credit rating will get your application approved, you may need to work on improving your credit score.

This may be frustrating, but it’s for your benefit, as every time you apply for a credit card the provider will perform a ‘hard’ inquiry on your credit report. If you are ultimately rejected for the balance transfer credit card, this will hurt your credit score, stay on your credit history for up to 12 months, and potentially make things worse.

This doesn’t mean you won’t be approved by any balance transfer credit card provider, but you should always try to move the odds in your favour first before applying. 

What should I be wary of when consolidating debt?

Consolidating your debt isn’t an easy fix. While it’s often a smarter way to manage your debt and could help you pay off your debt sooner, you do have be aware of the fine print.

Things to look out for:

  • Check that your new interest rate is lower than what you are currently paying, otherwise you may end up finding yourself in more debt.
  • Don’t forget to take the fees and charges into consideration.
  • If you have arranged a balance transfer that has a low rate, or no rate, introductory period, make sure you check what the interest rate is after this period ends and commit to paying off your debt during the intro period.
  • If you are considering a credit card provider that is not well-known, check they are licenced by ASIC.
  • Be cautious when companies offer ‘credit fix’, ‘credit repair’ or ‘debt solution’ and charge a fee on the assertion they will improve your credit rating. Credit card defaults are automatically marked against your name and cannot be removed unless you prove it’s incorrect.

Need some help?

If you’re feeling overwhelmed and want some help managing your debt, it might be worth talking to a financial counsellor. This is a free service offered by community organisations, community legal centres and some government agencies to help you solve your money problems. For more information, please visit ASIC’s MoneySmart page.

Related pages:


Debt consolidation is the process of rolling several old debts into one new debt – usually to save money or for the sake of convenience.

^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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