Struggling with Multiple Debts: The Value of Debt Consolidation

Keep in mind the following information is General Advice and is obviously not personalised for your unique needs, objectives or financial situation. Please get in touch with your advisor before taking any action on the below points so they can advise on the appropriateness of this for you.


Most people experience debt at one time or another in their life. Many of us will incur multiple debts and face the challenges of repayments, interest rates, account fees and other expenses that come with a loan.

For people struggling to manage their debts, the restructuring process called debt consolidation can be of immense benefit:

Debt Consolidation

As the name suggests, debt consolidation involves condensing all or some of your debts into a single one. This is typically done by taking out a personal loan to the value of your existing debt. Say you have three different credit card debts, for example $1,000, $4,000 and $6,000. Taking out a personal loan to the sum of the debts ($11,000) and all outstanding interest leaves you with a single more manageable debt with a lower interest rate charge. Alternatively, this can be done through an existing home loan as well.

Managing Repayments

While taking out a new loan to ease your debt situation can seem a little counter-intuitive, when the application is correct, it does work and makes your repayment situation much simpler.

When you consolidate, you will eliminate all the individual extra fees associated with your debts, including differing interest rates, account fees and other operating costs.

Simplification of the repayment process means you can go from multiple monthly payments to one; this will greatly ease the time and budgeting needed to manage debts.

Clarifying Your Timeline

Handling multiple debts is often overwhelming – stress makes the situation harder to deal with as well. A timeline of debt reduction is often difficult for people to see clearly when they are dealing with multiple repayments. Debt consolidation is instrumental in avoiding this, by offering a single repayment timeline. Creating a clearer schedule reduces stress and eases financial planning and budgeting processes.

Other Benefits

Multiple debts mean multiple interest rates. What happens when the biggest loan also has the highest interest rate? Prioritising which debts will be paid off first can be complicated when ignoring other debts is not an option. Consolidation means a single interest rate – beginning the debt consolidation process when you’ve improved your credit score can leave you with a lower interest rate. As an added bonus, depending on the loan structure, you might opt for a fixed term to lock in the lower rate.

Considering the previous example, consolidating credit card debt into a personal will almost halve your interest costs and possibly removing all ongoing annual fees for each card. Consolidating the same against a home loan will reduce interest costs by over 75%.


A clearer timeline, easier management and less fees make consolidation hard to argue against. Whilst number analysis can be convoluted and confusing when making big financial decisions, consulting an expert for advice isn’t.

Everyone has unique living expenses which means knowing the best available options to suit your needs is vital. If you’re seeking advice to deal with multiple loans, contact the team at Morrows Wealth Management.

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