Is a balance transfer or personal loan better for credit card debt?

A balance transfer is better if you owe under $8,000 and can clear it within the 0% introductory period (typically 12 to 18 months). A personal loan is better for larger amounts, longer repayment needs, or when you also want to consolidate non-card debts like buy now pay later or medical bills.

How much credit card debt should I have before consolidating?

Consolidation is generally worthwhile when you owe $3,000 or more across one or more credit cards at rates above 15%. Below $3,000, the fees and effort of a new loan or balance transfer may outweigh the interest saving. The higher your rate and balance, the more consolidation saves.

What happens to my credit cards after I consolidate?

Your credit cards remain open unless you close them. It is strongly recommended to close them or reduce the limits to zero after consolidation. Leaving cards open creates the risk of spending on them again, which is the most common reason consolidation fails.

Will consolidating credit card debt affect my credit score?

Taking out a new loan or balance transfer card creates a hard enquiry on your credit file, which may temporarily lower your score. However, reducing your credit card balances to zero improves your credit utilisation ratio, which is a positive signal. Consistent repayments on the new loan will improve your score over time.

Can I consolidate credit card debt with bad credit?

Yes, though your options are more limited. Balance transfer cards typically require good credit. A secured personal loan backed by a vehicle is usually the most accessible option for borrowers with impaired credit. See our guide to consolidation with bad credit for what lenders assess and what rates to expect.

What is a revert rate on a balance transfer card?

The revert rate is the interest rate that applies after the 0% introductory period ends. It is typically 20% to 22% p.a., which is as high as or higher than a standard credit card rate. Any balance remaining on the card when the intro period expires will be charged at this rate.

How can Emu Money help with credit card debt consolidation?

Emu Money's finance specialists search across 50+ lenders to find a consolidation loan that reduces what you are paying on credit card debt. They compare rates, fees, and terms to find the best fit for your situation and credit profile. Subject to lender approval, terms and conditions apply.

Credit Card Debt Consolidation: Your Options in Australia

Written byClaudia Ainsley

Reviewed byMatt Leeburn

Updated 21 Jul 2026Content was accurate at the time of publication

Credit card debt consolidation in Australia typically works one of two ways: a personal loan that pays off your card balances at a lower fixed rate, or a balance transfer card that gives you 0% interest for an introductory period. Which one is better depends on how much you owe and how quickly you can pay it off. Australians currently owe $21.5 billion in credit card debt that is accruing interest, and the average card rate sits at 20.99%.

Why credit card debt is uniquely expensive

Credit cards are revolving debt with no fixed end date. If you only make the minimum repayment, typically 2% of the balance or $25 (whichever is higher), the balance barely moves.

On an $8,000 credit card at 20.99%, paying only the minimum takes over 40 years to clear and costs more than $40,000 in interest. You pay back more than five times the original balance. That is not an exaggeration. It is the mathematical reality of compound interest on revolving credit with no structured paydown.

This is why consolidation exists. Moving credit card debt into a fixed-term loan or a 0% balance transfer breaks the cycle by giving the debt an end date.

Option 1: Personal loan

	Credit cards	Personal loan
Balance	$15,000	$15,000
Rate	20.99%	11%
Monthly repayment	~$375 (minimum)	$388
Fixed end date	No	Yes (48 months)
Total interest over 4 years	~$8,900	$3,609
Interest saved		~$5,300

Option 2: Balance transfer credit card

	Current card	Balance transfer
Balance	$8,000	$8,160 (including $160 fee)
Rate	20.99%	0% for 18 months
Monthly to clear in 18 months	Not possible at minimum	$454
Total cost	Thousands in interest	$160 (fee only)

Which option to choose

Situation	Best option	Why
Under $8,000, can clear in 12 to 18 months	Balance transfer card	0% interest makes it cheapest if you clear it in time
Under $8,000, need longer than 18 months	Personal loan	Fixed term prevents revert rate risk
$8,000 to $50,000	Personal loan	Balance transfer limits rarely go this high
Multiple debt types (cards + BNPL + loans)	Personal loan	Balance transfers only work for card debt
Impaired credit	Secured personal loan	Balance transfer cards require good credit

The step that matters most: close the cards

Whether you use a personal loan or a balance transfer, the most important step happens after the balance is cleared. Close the credit cards or reduce their limits to zero.

The most common consolidation failure is paying off cards and then spending on them again. You end up with the consolidation loan or the balance transfer card plus new balances on the old cards. That is worse than where you started.

If you cannot close the cards entirely, reduce the limits to the lowest amount your provider allows. Remove the cards from digital wallets and online shopping accounts. The goal is to eliminate the temptation, not just manage it.

When consolidation is not enough

If your credit card debt accumulated because of a drop in income, a medical event, or genuine financial hardship, consolidation may not be the right answer. Taking on a new loan does not help if the underlying problem is insufficient income to meet repayments.

In that situation, contact the National Debt Helpline (1800 007 007) for free financial counselling, or ask your credit card provider about hardship provisions. Your lender is legally required to respond to a hardship notice within 21 days and may offer reduced repayments, paused interest, or waived fees.

For a broader look at whether consolidation is the right decision for you, see our guide to whether debt consolidation is a good idea.

This article is general information only and is not financial advice.

Frequently asked questions

For balances under $8,000 that you can pay off within 18 months, a 0% balance transfer card is usually cheapest. For larger balances or when you need a longer repayment period, a personal loan at a fixed rate gives you a set end date and predictable repayments. Both options replace high-interest credit card debt with a lower-cost alternative.

Paying too much interest on credit card debt?

Emu Money's finance specialists can assess your credit card balances and find a consolidation loan that saves you money. They search across 50+ lenders to match you to a competitive rate and a repayment schedule that clears the debt on a set date. Subject to lender approval, terms and conditions apply.

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This article is general information only and is not financial advice.

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