Despite its firm date in the calendar, Christmas always seems to sneak up on us. For the happiest time of the year, it’s also a demanding one, with gift and travel expenses racking up fast.
Even excluding home loans, according to Canstar, around 35% of Australian households have debts heading towards the end of 2025. These debts can have a profound impact on mental health during the festive period.
One way to tackle this stress head-on is through debt consolidation. By consolidating multiple debts into one payment, you’re reducing the stress of making multiple deadlines, and paying one interest rate instead of several – here’s how it works.
What is debt consolidation
Debt consolidation involves merging several debts – such as credit cards or personal loans – into a single, more manageable loan. In practice, this means taking out one new loan that covers the total amount of your existing debts, then using that loan to pay them off and close those accounts.
Moving all of your debts into one account can reduce financial stress, simplify your repayments and potentially save you money on interest.
Depending upon your financial situation, you may be able to get a debt consolidation loan that is either unsecured or secured. Before you make any decision, make sure to speak to your accountant or financial advisor.
Why now is the perfect time to consolidate
When it comes to debt consolidation, the sooner you get started, the better you’ll feel and that sense of relief is only amplified during the festive season. Christmas should be about celebrating with family and friends, not worrying about repayments or juggling multiple debts.
Here’s why acting now makes sense:
1. Beat the festive rush
Lenders and brokers tend to get busier as the year winds down. By starting your consolidation early, you can get ahead of the queue, lock in a rate sooner, and have everything sorted before the holiday spending ramps up.
2. Free up cash flow for the festive season
When you roll multiple debts into one loan – ideally at a lower interest rate or with lower repayments – your cash flow could benefit. That means more breathing room in your budget for Christmas gifts, summer activities, or even just a bit of financial peace of mind.
3. Start the new year fresh
Instead of heading into January juggling several repayments and leftover holiday debt, you’ll have one clear, structured loan in place. That makes it easier to stay on top of your budget and start 2026 with confidence.
4. Take advantage of current opportunities
If rates are steady or you’ve seen a better offer come up, now’s a great time to review your options. Even a small drop in interest can make a big difference over the life of your loan, especially when consolidating multiple balances.
So before the Christmas chaos kicks in, consider whether consolidating your debt could make your holidays (and your new year) a little lighter and a lot less stressful.
What to watch out for
Debt consolidation can be a smart move, but like any financial decision, it’s worth going in with your eyes open. Before you roll your debts into one loan, take a moment to check the details and make sure it’s genuinely working in your favour.
Here’s what to keep in mind:
Compare the total cost, not just the rate
A lower interest rate sounds great, but always look at the overall cost of the new loan, including fees, loan terms, and any early payout costs from your existing debts. Sometimes a slightly higher rate with fewer fees can be the better deal.
Watch out for fees and fine print
Application fees, ongoing charges, or early exit fees from your current loans can eat into your savings. Your broker can help you weigh these up and make sure you’re still coming out ahead.
Avoid racking up new debt
Once you consolidate, it’s tempting to start spending again, especially around Christmas. Try to keep your credit cards closed or with low limits so you’re not undoing your hard work. The goal is to clear debt, not create more of it.
Choose the right loan type for your situation
You’ll usually have the option of a secured (using an asset like a car) or unsecured loan to consolidate your debt. Secured loans typically offer lower rates, but come with the risk of losing the asset if you fall behind. A broker can help you decide which option best fits your circumstances.
Stay realistic with your loan term
Stretching your loan over a longer period can reduce your monthly repayments, but you might end up paying more in interest overall. Look for a term that balances comfort and long-term savings.
Handled correctly, debt consolidation can give you real breathing room, but it’s worth getting expert advice before you make the move. A good broker will help you understand the full picture and make sure the numbers stack up in your favour.
Final thoughts: take control before Christmas
Heading into the festive season with multiple debts can be stressful, but it doesn’t have to be. Debt consolidation lets you simplify your repayments, potentially lower your interest, and free up cash for Christmas gifts, holidays, or just some peace of mind.
The key is to act early. By consolidating now, you can enjoy the holidays without the lingering worry of juggling multiple repayments, and start the new year with a clear, manageable financial plan.
A qualified broker can help you review your options, find competitive rates, and guide you through the application process, making it easier to take control of your finances before the year ends.
Take the first step today and set yourself up for a smoother, less stressful festive season.
