Why So Many Australians Are Carrying Multiple Debts
The post-pandemic cost-of-living crunch has stretched household budgets across the country. According to the Australian Securities and Investments Commission (ASIC), nearly half of Australian debtors — around 5.8 million people — have reported struggling to keep up with repayments at some point. Reserve Bank data shows Australians charged $28 billion to credit cards in a single December, with $17.9 billion of that accruing interest.
The problem is rarely one single debt. It is the combination. A mortgage here, a personal loan there, a credit card with a 20% interest rate, a HECS-HELP balance, maybe even money borrowed from family. Each debt has its own due date, its own interest rate, and its own mental toll. The National Debt Helpline logged more than 183,000 contacts in the 2025-26 financial year — the busiest year ever for the free service — with mortgage and credit card stress among the top reasons people reached out.
One Sydney mortgage broker, Andrew Wallace of Crowd Property Capital, recently shared a client story that captures this pattern. The client had a home loan, credit card debt, private loans, and owed family members $20,000 after a failed business venture. Wallace helped consolidate everything into a single loan structure, saving the client around $500 a month. Within a year, that client was calling back about buying a second property.
How Debt Consolidation Actually Works
Debt consolidation means taking out one new loan — typically at a lower interest rate — to pay off several existing debts. You are left with a single monthly repayment and, ideally, a lower overall interest cost. There are a few common routes in Australia.
Personal loans for debt consolidation are the most straightforward. Unsecured personal loans in Australia currently start from around 5.76% to 6% comparison rate for well-qualified borrowers, though rates can climb well beyond that depending on your credit profile and the lender. Secured options, where you use an asset like a car as security, can push rates lower, sometimes from around 5.79%. Loan amounts typically range from $2,000 up to $100,000 depending on the lender.
Balance transfer credit cards offer a different angle. Many Australian credit card providers offer 0% interest on balance transfers for periods of 12 to 24 months, with a one-off fee typically around 3% of the transferred amount. After the promotional period ends, the rate jumps to around 20% to 22%, so this strategy only works if you have a realistic payoff plan before the honeymoon period expires.
Mortgage refinancing is another option for homeowners with decent equity. Rolling credit card and personal loan debt into a home loan can dramatically cut the interest rate, but it also stretches the repayment over a much longer period — which means you may end up paying more interest overall even at a lower rate.
A Closer Look at Your Options
| Option | Typical Rate | Loan Amounts | Best For | Advantages | Watch Outs |
|---|
| Unsecured personal loan | From ~5.76% comparison rate | $2,000 – $100,000 | People with no collateral | Fixed repayments, clear payoff date | Higher rates for weaker credit profiles |
| Secured personal loan | From ~5.79% comparison rate | Varies by lender | Borrowers with an asset to secure | Lower rates than unsecured | Risk of losing the asset if you default |
| Balance transfer card | 0% for 12–24 months, then ~20%+ | Up to your credit limit | Credit card debt under $20,000 | Interest-free period | Balance transfer fee ~3%, rate jumps after promo |
| Mortgage refinance | Home loan rates, often below 6% | Large amounts | Homeowners with equity | Lowest ongoing rate | Longer term, more interest paid overall, fees |
Before comparing rates, get a clear picture of your total debt and your credit score. Many lenders — from the big four banks to non-bank lenders like Pepper Money and Liberty — offer debt consolidation products, and some specialise in self-employed borrowers or those with less-than-perfect credit histories. Using a comparison site like Canstar or Money.com.au lets you see rates across dozens of lenders in one place.
Practical Steps to Consolidate Successfully
Step 1: List every debt. Write down the balance, interest rate, and minimum repayment for each debt. This includes credit cards, personal loans, car loans, buy-now-pay-later balances, and any money owed to the tax office. You cannot consolidate what you have not itemised.
Step 2: Check your credit score. Your credit file plays a big role in which rates you qualify for. You can access your credit report for free through agencies like Equifax, Illion, and Experian. If your score is weak, consider spending a few months improving it before applying.
Step 3: Compare three or more options. Do not accept the first offer. Check comparison rates, not just the headline rate, and factor in establishment fees, monthly account-keeping fees, and any early repayment penalties.
Step 4: Do the math on the total cost. A lower monthly repayment is not always a win. If the loan term is longer, you may pay more interest over the life of the loan. Use the repayment calculators on comparison sites to model different terms.
Step 5: Close the old accounts. This is the step people skip, and it is often the one that makes consolidation fail. If you pay off a credit card through a consolidation loan but keep the card open, the temptation to spend is still there. Close the accounts you have cleared.
Step 6: Set up automatic repayments. One of the quiet benefits of consolidation is the mental space it creates. Automate the single repayment to land the day after payday, and you remove the risk of late fees entirely.
When Debt Consolidation Is Not the Answer
Consolidation is a tool, not a cure. If the root problem is overspending — spending more than you earn month after month — then a consolidation loan just gives you a bigger credit limit to work with. The National Debt Helpline (1800 007 007) offers free, confidential financial counselling for people who need help negotiating with creditors, setting up hardship arrangements, or simply figuring out where to start. Financial counsellors are independent of lenders and banks, which makes their advice uniquely trustworthy.
For self-employed Australians, debt consolidation deserves extra care. Non-bank lenders like Pepper Money and Liberty have built products specifically for people with irregular income, and some will even consolidate ATO tax debt into a broader loan structure — something not all mainstream banks will touch. If you owe the tax office, a mortgage broker who understands small business finance is worth the conversation.
Making It Stick: What Comes After Consolidation
The real work starts after the loan settles. Treat the consolidation as a debt-free date on the calendar and work backwards. If you consolidated $30,000 at a rate that lets you pay it off in five years, consider rounding up your repayments to shrink that timeline. A $50 weekly buffer can cut years off a personal loan.
Build a simple budget that tracks where money actually goes for one month. Most Australians who relapse into debt after consolidating do so because they never changed their spending habits, not because the loan was wrong. The goal is not just fewer repayments — it is a different relationship with money.
If you are drowning in multiple debts, the National Debt Helpline and comparison tools like Canstar are free places to start. A conversation with a mortgage broker or a lender that specialises in debt consolidation personal loans costs nothing and could reveal options you did not know existed. One repayment, one interest rate, one clear finish line — that is the promise of consolidation, and for thousands of Australian households this year, it has delivered exactly that.
研究の知恵