Three ways to consolidate your debt


Three ways to consolidate your debt

If you have outstanding loans, credit cards, overdrafts or other debts that worry you, and you’re finding that making payments to lots of different lenders each month is becoming unmanageable, you may want to consider debt consolidation. If you don’t already know, debt consolidation simply means taking a new line of credit (such as a loan and credit card) and using it to pay off all the other, smaller debts.  You’ll then only have to make a single monthly payment, which should be easier to manage, and you may be able to lower your payment at the same time too.

Remember, debt consolidation isn’t going to make your debts disappear – you’ll owe exactly the same amount.  But it can make them easier to deal with by giving you just one payment to budget for each month.  And you may be able to pay less each month, although in some cases you may end up repaying for longer, so it could cost you more overall.

What’s the best way to do this?

Well, it’ll all depends on how good your credit history is. If you have a good credit score you’ll certainly have a lot more options open to you. But, if your credit score is less desirable, don’t despair. There are still things you can do.

Transfer the balance onto a credit card – If you’ve got a good credit score then there are some excellent balance transfer credit card deals – some offering 0% for 30 months or more – which mean that this is likely to be the cheapest way to consolidate, if you qualify. Consolidating your debts onto a credit card with a 0% offer period could let you clear them much more quickly as you aren’t paying any interest during the offer term. 

Even if you credit score is less than perfect, you may be able to get a reasonable balance transfer credit card.  Don’t just apply and hope for the best:  you may be rejected, which will further damage your credit history. Use a website that does soft searches (that don’t show up on your credit report), like moneysavingexpert’s to work out which cards you might be accepted for and at what interest rate.

Ocean’s credit card is designed specifically for those who may have struggled with credit in the past, and offers competitive rates of 34.9% APR representative. To find out more, including how to apply, click here >

Debt consolidation loan

You can also take a loan to consolidate your debts.  In some cases these are marketed as “debt consolidation loans”. The process is the same – you take a single new loan large enough to cover all your existing debts and use the new loan to pay all the old borrowings off.

If your credit rating is excellent or good you may be able to get a competitively priced unsecured personal loan.

If your credit rating isn’t quite as good and you are a homeowner, another option is to take a secured loan.  Like a mortgage, these are secured against your house – so your home could be at risk if you don’t keep up with the repayments.  With a secured loan you are likely to be spreading the repayment out over many years – often 10 or more, which means whilst the monthly cost may be lower, you will end up paying back more overall.

If you’re looking for a debt consolidation loan, Ocean offer both secured and unsecured loans suitable for debt consolidation. To find out more, click here >


If you are a homeowner and you have a good amount of equity in your property you may be able to remortgage to consolidate your debts.  You’ll need a good credit history too.

Remortgaging means replacing your existing mortgage with a larger one and using the extra funds you’ve released to pay off your other debts.  If you are on your lender’s Standard Variable Rate you may be able to find a more competitive mortgage deal too.  It makes sense to speak to your existing mortgage lender to see what they can offer you – and to a broker, such as Ocean, to get a feel for what other offers are available on the market.

Remember, like a secured loan, a remortgage means that you may be repaying over a longer period which means you may well repay more overall, and could put your home at risk if you aren’t able to keep up with the repayments, so it is something that you need to consider carefully.