Debt Consolidation Calculator

See if consolidating your credit card debt into a personal loan could save you thousands in interest and fees.

Credit Card

$1k$100k
5%30%
Typical: 2-3% of balance
1%10%
Yearly card fee
$0$700

Personal Loan

3%25%
Capitalised into loan amount
$0$2,000
Ongoing monthly service fee
$0$50
Review Required
No Savings
Consolidation may not reduce your total costs with these terms

Key Metrics

Total Debt
$12,000
CC Rate
20.99%
PL Rate
9.99%
PL Monthly Repayment
$12.00
Total Saved
+$0
Time Saved
Same

Cost Comparison

Like-for-like over the 5-year personal loan term

Credit Card$0
Interest: $0Fees: $0
Personal Loan$0
Interest: $0Est. fee: $400Monthly fees: $720

Personal Loan Breakdown

Loan Principal$0
Total Interest$0
Establishment Fee$400
Monthly Fees (60 months)$720
Total Amount Payable$0

Estimate Only

This calculator provides estimates only and does not constitute financial advice. Results assume minimum payments on the credit card and standard amortisation on the personal loan. The establishment fee is capitalised into the loan principal. Actual rates, fees, and terms vary by lender. Speak to a NIK Finance broker for personalised consolidation advice.

Understanding Debt Consolidation in Australia

Australian households carry an average of $3,200 in credit card debt, often at interest rates exceeding 20% p.a. When you only make minimum payments (typically 2-3% of the balance), most of your payment goes toward interest, and the debt can take decades to clear. Debt consolidation replaces this high-interest revolving debt with a structured personal loan at a significantly lower rate.

The key advantage of consolidation is the fixed repayment schedule. Unlike credit cards where minimum payments shrink as the balance decreases, a personal loan has consistent monthly repayments that systematically reduce the principal. This means you pay off the debt in a defined timeframe — typically 2 to 7 years — rather than the 25+ years it can take with minimum credit card payments.

However, consolidation isn't free. Personal loans come with establishment fees (typically $150-$600), monthly account fees ($0-$15), and the interest itself. This calculator compares the total cost of both options over the same time period so you can see the true saving. It also highlights how much credit card balance would remain if you continued with minimum payments for the same period as the personal loan term.

For consolidation to work, the personal loan rate needs to be meaningfully lower than your credit card rate, and you need to avoid running up new credit card debt after consolidating. A NIK Finance broker can help you find the best consolidation loan from our panel of 100+ lenders and create a plan to become debt-free faster.

Frequently Asked Questions

What is debt consolidation?
Debt consolidation combines multiple debts (typically credit cards, personal loans, or buy-now-pay-later accounts) into a single loan with one regular repayment. The goal is to secure a lower interest rate, reduce total costs, and simplify your finances. In Australia, the most common form is taking out a personal loan to pay off high-interest credit card debt, as personal loan rates (typically 7-15%) are significantly lower than credit card rates (typically 18-22%).
How does this calculator work?
This calculator compares two scenarios: continuing to pay minimum payments on your credit card versus consolidating into a fixed-rate personal loan. For the credit card, it simulates month-by-month payments using your minimum payment percentage (with a $25 floor) and tracks total interest and annual fees. For the personal loan, it calculates standard amortised repayments including the establishment fee capitalised into the loan. It then compares the total cost of each option over the same time period to determine if consolidation saves you money.
Why does my credit card take so long to pay off with minimum payments?
Minimum payments on credit cards are typically 2-3% of the outstanding balance. As your balance decreases, so do your payments — meaning you pay progressively less each month. Most of each minimum payment goes toward interest rather than reducing the principal. On a $12,000 balance at 20.99%, minimum payments of 2% could take over 30 years to pay off and cost more in interest than the original debt. This is why consolidation with a fixed repayment schedule can be so effective.
What fees are involved in a personal loan for consolidation?
Personal loans typically have three types of fees: an establishment fee (also called application or setup fee, usually $150-$600, often capitalised into the loan), ongoing monthly account fees ($0-$15 per month), and sometimes an early repayment fee if you pay out the loan ahead of schedule. This calculator accounts for establishment fees (added to the loan principal) and monthly account fees. Always check the comparison rate, which includes most fees, when comparing loan offers.
Is debt consolidation always a good idea?
Not always. Consolidation works best when the personal loan rate is significantly lower than your credit card rate and you commit to not running up new credit card debt. It may not be worthwhile if: the rate difference is small, the fees are high relative to your balance, you have a small balance that you could pay off quickly, or if you lack the discipline to avoid re-using the credit card after consolidation. This calculator helps you see the numbers clearly so you can make an informed decision.
What happens to my credit card after consolidation?
After using a personal loan to pay off your credit card, the card will have a zero balance but remain open unless you close it. Financial advisors generally recommend closing the card or significantly reducing the limit to avoid the temptation of running up debt again — which would leave you worse off with both a personal loan and new credit card debt. If you keep the card for emergencies, reduce the limit to the minimum your bank allows.
How does the establishment fee affect my loan?
When an establishment fee is capitalised (added to the loan principal), you pay interest on it over the full loan term. For example, a $400 establishment fee on a 5-year loan at 9.99% means you actually pay roughly $510 for that fee over the life of the loan. This calculator includes the capitalised establishment fee in the loan principal calculation so the total cost comparison is accurate. Some lenders offer no-establishment-fee loans, but these often have slightly higher interest rates.
What credit score do I need for a consolidation loan?
In Australia, personal loan rates vary significantly based on your credit score. Borrowers with good to excellent credit (700+) can access rates from 6-10%, while those with average credit (500-699) may see rates of 10-18%. If your credit score is low, the personal loan rate may not be much better than your credit card, reducing the benefit of consolidation. Check your Kreddi Score to understand your financial position and get matched with lenders suited to your profile.

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