Debt Consolidation and Repayment

Repaying your debt can be a hard task without the right advice.

Debt Consolidation can involve assessing your current situation in terms of your current credit card, home loan or personal loan, and combining (refinancing) those debts in to a new lower interest loan to make it easier for you make repayments and pay down your debt.

Debt Consolidation Credit Card

Consolidate your debt with a low interest rate offer on balance transfers and purchases.

• $58 p.a. annual fee
• 13.14% p.a. on purchases
• 0% p.a. for 9 months on balance transfers
• Cash Advance Rate of 21.49% p.a.
• 55 days interest free
• Minimum Income Requirement of $15,000 p.a.

Read the ANZ Low Rate terms and conditions.

Consolidate your credit card debt with a balance transfer offer:

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			Interest rate (p.a.)	Balance transfer rate (p.a.)	Annual fee	Cash advance rate (p.a.)
	ANZ Low Rate	Offering a low interest rate on balance transfers and purchase, Plus a low annual fee.	13.14% p.a.	0% p.a. for 9 months	$58 p.a.	21.49% p.a.
	HSBC Credit Card	Consolidate you debt with low interest rate on balance transfers. Plus no annual fee for the life of the credit card.	17.99% p.a.	0% p.a. for 6 months	$0 p.a.	21.99% p.a.
	Virgin Australia Velocity Flyer Card – Balance Transfer Offer	Excellent long term balance transfer offer with a discounted annual fee for the first year	20.99% p.a.	0% p.a. for 8 months	$64 p.a. annual fee for the first year ($129 p.a. thereafter)	20.99% p.a.
	Citibank Clear Platinum Card	Competitive interest rate on purchases and balance transfers offer plus enjoy a competitive annual fee.	0% p.a. for 6 months (reverts to 11.99% p.a.) on purchases. 12.99% p.a. from 1 October, 2013	0% p.a. for 6 months	$49 p.a. annual fee for the first year ($99 p.a. thereafter)	0% p.a. for 6 months (reverts to 21.74% p.a.)
	Citibank ReadyCredit	No annual fee, no monthly servicing and no cash advance fees. Plus a long term balance transfer offer.	18.99% p.a.	5.9% p.a. for 24 months	$0 p.a.	18.99% p.a.
	HSBC Platinum Credit Card	Earn bonus 25,000 reward points with high credit limits, prestige services including a personal concierge service.Plus low interest rate on purchases.	19.99% p.a.	0% p.a. for 8 months	$129 p.a.	21.99% p.a.
	ANZ Platinum Credit Card	A low interest rate offer with a low annual fee.	19.39% p.a.	0% p.a. for 9 months	$0 p.a. annual fee for the first year ($87 p.a. thereafter)	20.99% p.a.
	Citibank Rewards Credit Card – Platinum Card	Consolidate your debt with a low balance transfer offer and a host of platinum privileges to enjoy.	20.99% p.a.	1.5% p.a. for 15 months	$199 p.a.	21.74% p.a.
	Bankwest Breeze MasterCard	A low interest Mastercard purchase rate and balance transfer offer from Bankwest.	0% p.a. for 4 months (reverts to 11.99% p.a.)	0% p.a. for 6 months	$59 p.a.	21.99% p.a.
	Westpac Low Rate Card	Save with a low rate on balance transfers and purchases with a low annual fee.	0% p.a. for 6 months (reverts to 13.49% p.a.)	3.99% p.a. for 6 months	$45 p.a.	21.49% p.a.
	St.George Vertigo	The low rate credit card made for those who love to shop with a low rate on purchases, up to 55 days interest free and a low annual fee.	13.24% p.a.	2.99% p.a. for 6 months	$0 p.a. annual fee for the first year ($55 p.a. thereafter)	21.49% p.a.
	Aussie Classic Low Rate MasterCard	A low interest rate offer combined with a low annual fee.	12.49% p.a.	5.99% p.a. for 5 months	$0 p.a. annual fee* for the first year ($49 p.a. thereafter)	20.99% p.a.

As the average of the personal debt of each Australian has risen to $50,000 – twice the amount of a short five years ago – more and more people are struggling with debt consolidation and repayment. Yes, we certainly also do have more assets these days. But due to increased financial pressures most of us face, debt consolidation loans are being utilised at an all time high. Balance transfers also provide a valid means for credit card consolidation and are steadily increasing in popularity.

Overview of debt consolidation and repayments:

There are several ways with which you can consolidate your debts and we will look at them in this article. By understanding how debt consolidation works you will be able to make an informed decision about your financial future. First, let’s look at.

Personal Loans

Since a personal loan can be fixed at a rate of around 13%, you’re allowed to transfers your higher credit card debts into your personal loan and repay at it’s own rate. Contact your financial provider to find out if balance transfers are available on your personal loan. Compare the best personal loans if you’re interested in pursuing this method.

Debt Consolidation Personal Loan Offer

Aussie Personal Loan – Over $20,000

Aussie now offers Personal Loans for just about anything you like.
Whether for a holiday, home renovations, a special project or even a wedding, a Personal Loan from Aussie can help you pay for any worthwhile purpose. It’s even a smart way to take control of your credit card debt.

• Min. Variable Interest Rate: 13.90% p.a.
• Min. Comparison Rate: 14.84% p.a.
• Min. Loan Amount: $3,000
• Loan Term: 1 year
• Application Fee: $199

Read the Aussie Personal Loan – Over $20,000 terms and conditions.

Home Equity

Home equity is currently one of the most cost effective ways to pay back your existing debt. Provided you already have equity in your home, you could apply for an equity line rate loan which will draw money against your ‘equity’ (the portion of your home that has been paid off by you.)

Because of the all-time low interest rates we enjoy now, it is cheaper to draw money on a home loan than say with a credit card. Of course, you will need to factor in the time span here as well.

Debt consolidation loans

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Name
Aussie Personal Loan – Over $20,000	Consolidate your multiple debts (credit cards, car loans, student loans and other personal loans) in to one low interest loan
SocietyOne Low Interest Personal Loan	An Australian peer-to-peer lending platform. Access low rates of interest and fixed monthly repayments. No monthly fees, no early exit fees, or penalties for making overpayment.
Citibank Personal Credit	Unsecured line of credit with no fixed term – pay it off as fast or as slow as you want. Can be used as credit, to withdraw cash or pay by cheque.
Fox Symes Debt Solutions	Consolidate your debt with a Fox Symes Debt Consolidation Solution. Fox Symes may be able to assist you to get back in control of your finances and start to reduce your debt whether it be your mortgage repayments, credit card, personal loan.

Debt consolidation loans are already very popular in the AU. These loans are aimed at giving you the best deal to pay off several others loans, such as a student loan, a personal loan, or even credit card debt.

It is advisable to analyse your options thoroughly and always pay back more than necessary to reduce the debt much faster. Otherwise your debt will remain active for many years to come. Just by choosing the right product you can save thousands in the process. It certainly pays to shop around.

Credit card balance transfers

Credit card balance transfers allow you to choose a reduced interest rate credit card for a honeymoon period of between 6-months up to lifetime.

Just bear in mind that this is really only an option if you intend to pay off the card within the honeymoon period, otherwise you’ll end up paying hefty interest rates which will increase your debt.

Debt consolidation and repayment with this method will require discipline from you.

As mentioned frequently among Credit Card Finder^® articles and guides, balance transfers are the epitome of cheap and effective debt consolidation. Some of your options for balance transfers include:

• 2.99% for 6 months Balance Transfer offer on the St George Vertigo with a
  $55 annual fee.

There are plenty more balance transfer cards on offer which you can compare. If you’re unfamiliar with the balance transfer concept, or want to find out how you can avoid common pitfalls and ‘traps’ associated with them, see our balance transfer guide.

Basic knowledge you need to possess if you are to have a fighting chance of getting out of debt:

Anyone in debt needs to become an expert on the subject pretty quickly. No matter how lax you may have been previously with your finances, you should make sure you know every available option, where to turn, and who to speak to.

• How you got into debt in the first place. This may give you some clues how to get out of it, and should certainly help you avoid it happening again. It may have happened for personal reasons, business reasons, or bad financial planning.
• What exactly is your financial situation? You need to know what your income, expenditure and assets are to the dollar. Without this information, you cannot hope to make any positive changes.
• Create a budget based on the above information. This will help you plan ahead to live the most frugal life possible until your debt issue is resolved. You will need to cut back, and maybe realise some assets or increase your employment workload.
• Are you eligible for any government assistance? Depending on your situation, you may be able to get some help from the government. Information is available at the Centrelink website.
• Are your lenders willing to help? Don’t be shy about speaking to your lenders and letting them know you’re in debt trouble. It is in their interest to have you remain solvent, and they may work out a more suitable payment plan for you to achieve this end. The alternative – your bankruptcy – would leave them with nothing.
• Will your credit rating stretch to a consolidation of your debts? If so, you must still make certain that this is the right thing to do. If high fees and high interest rates are involved, you could end up in an even deeper debt hole.
• Court proceedings. If you do end up in court, you can apply to have your debt repaid by installments. The amount has to be low enough for you to keep up with the repayments, but not so low that the court thinks you’re being unreasonable.
• Bankruptcy. This is the last resort, but at least it draws a line under your current debt. The downside is that your will not be discharged as a bankrupt for three years, and during that time your ability to borrow will be severely restricted and you may be turned down for certain jobs.

Comparing different tactics of credit card repayment

If you have more than one credit card with an owing balance, there are two ways you can approach paying off your debt systematically. Both have its advantages and disadvantages, and will be subjective to different people.
For the sake of these calculations, we’ll use 3 credit cards. Their features are:

Card A:
Balance: $1000
Interest Rate: 15%

Card B:
Balance: $2700
Interest Rate: 20%

Card C:
Balance: $800
Interest Rate: 15%

Monthly Repayment: $500.

Lowest Balance First (The ‘Snowball’ Method)

This method consists of paying off your smallest balances first, regardless of interest rate and other factors. It is a popular method as although you may end up paying more, it gives a sense of achievement by clearing a balance sooner than later.
Using our credit card calculator, by using the snowball method, it was found that:

The ‘Snowball Method’ input into the calculator, using the hypothesized features.

Highest Interest First

In the majority of cases, this method will yield lower interest repayments over the life of your balance repayments. The results for paying off the highest interest cards first were:

The ‘Highest Interest Repaid First’ technique input into the calculator, using the hypothesized features.

The Results

By paying off the highest interest cards instead of lowest balance first, you would have saved $45.29. Next time you need to pay off multiple balances, give our free calculator a go to help you budget accordingly.

Important tips

If you do look into debt consolidation and repayment then please remember that extra payments each month will help you to reduce your loan a lot faster. You’ll save thousands of dollars in the process and come away debt-free a lot sooner.

We have written a number of articles covering the topic of Debt Consolidation and Repayment which will hopefully make your journey to becoming debt free faster and a lot easier:Debt Consolidation and Repayment.