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Managing debt has become increasingly challenging for many Australians nationwide, with the average Australian household debt amounting to $313,633 in 2025. If you’re struggling with this, a debt consolidation loan may help to simplify your finances.
With interest rate fluctuations and increasing cost of living, there is currently a huge amount of strain on household budgets. This can make it far harder for many people to stay on top of their debts and repayments, especially in complex cases. In fact, Australian household debt in total climbed to a record $3.33 trillion in 2025, according to ABS data, reflecting the ongoing financial pressure many households are facing.
Debt can be anything from personal loans and car finance, to credit cards and other services, and multiple debt sources can quickly increase and become stressful. Each debt will have its own due date and interest rate, so feeling in control can be difficult. With the cost of living continuing to rise, many Australians may be looking for practical ways to regain control of their finances.
That’s where a debt consolidation loan comes in.
What is a debt consolidation loan?
A debt consolidation loan is a personal loan used to combine multiple existing debts into a single new loan. Instead of managing separate repayments across several accounts, you make one regular repayment to one lender. Depending on your circumstances, consolidating debt may help reduce the amount of interest paid over the life of the loan while also simplifying your finances.
Many people choose to consolidate credit card debt because credit cards often carry higher interest rates than personal loans. Debt consolidation loans are also commonly used to combine debts such as personal loans, car loans and ‘buy now, pay later’ balances. While consolidation does not reduce the amount you owe, it can make repayments more manageable and provide a clearer pathway towards paying down debt over time.
How to consolidate credit card debt
For many Australians, credit cards are one of the biggest sources of financial stress, with the average balance per credit card account at $3,592. High interest rates can make it difficult to reduce balances, especially when repayments are spread across multiple cards.
The first step to consolidating credit card debt is understanding exactly how much you owe across all accounts. Reviewing balances, interest rates and minimum repayments can help you determine whether consolidation may improve your financial position.
Once approved for a debt consolidation loan, the funds are typically used to pay out existing debts, leaving you with one ongoing repayment to manage instead of several. This can make budgeting simpler and provide more certainty around how long it may take to repay your debt.
It’s also important to think about what happens after consolidation. Continuing to use cleared credit cards without a repayment strategy can lead to debt building up again over time. Many people choose to reduce credit limits or close unnecessary accounts to help stay on track financially.
Credit card debt tips to help you stay on track
When it comes to managing credit card debt, consistency is often more important than quick fixes. Small financial habits maintained over time can make a significant difference to reducing balances and improving long-term financial wellbeing.
One of the most effective credit card debt tips is to pay more than the minimum repayment whenever possible. While minimum repayments may keep your account current, they can significantly extend the amount of time it takes to pay off your balance and increase the amount paid in interest.
It can also help to reduce the number of active credit cards you have open. Multiple accounts can make spending harder to track and increase the temptation to rely on credit for everyday purchases. Simplifying your finances may make it easier to stay in control of repayments and budgeting.
Building an emergency savings buffer, even gradually, may also help reduce reliance on credit cards when unexpected expenses arise. Having savings available for emergencies can provide greater financial stability and help prevent debt from increasing over time.
How to manage multiple debts without the stress
Managing multiple debts often starts with understanding your complete financial position. Here are a few ways you can do this:
- Review all outstanding balances and repayments to gain a full understanding of your outgoings to debts
- Create realistic household budgets so that you can prioritise your repayments
- Review your spending habits to ensure you stay on track
- Automate your repayments so that you can minimise stress.
If debt is becoming difficult to manage, it’s important to seek support early. Speaking with your lender may help you understand what options are available and prevent financial pressure from escalating further.
At IMB Bank, we understand that managing debt can feel overwhelming. Our team can help you explore loan options designed to simplify repayments and support your financial wellbeing, so you can feel more confident about taking control of your financial future.
