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Debt consolidation options compared (UK)
This page gives a general overview of different ways unsecured debts can sometimes be consolidated, such as loans and balance transfer cards.
High‑level comparison
| Option | How it works | Potential pros | Potential cons |
|---|---|---|---|
| Balance transfer card | Move existing credit card debt onto one card, often with a one‑off transfer fee and 0% interest for a set period | Can reduce or pause interest; simplifies multiple card payments | Transfer fees apply; promotional rate ends after introductory period; requires good credit |
| Unsecured consolidation loan | Take out a new loan to pay off multiple unsecured debts, then repay the new lender at a fixed rate | Fixed repayment schedule; one monthly payment; may have lower rate than existing debts | Early‑repayment or arrangement fees; interest cost can be higher over a longer term; borrowing limit depends on your credit |
| Secured consolidation loan | Borrow a larger amount secured against your home or other asset to clear existing debts | Larger borrowing potential and possibly lower interest rate | Your home or asset is at risk; overall cost may be higher if the term is long |
Overview of common consolidation options
Balance transfer cards
A balance transfer credit card lets you move existing credit‑card debt onto a new card, usually paying a one‑off transfer fee. Many balance transfer cards charge 0% interest for an introductory period, which can reduce the cost of borrowing if you repay the balance within that window. However, when the promotional rate ends the interest can be high, and you’ll need a good credit rating to be approved.
Debt consolidation loans
A debt consolidation loan involves taking out a new loan to repay multiple debts, leaving you with one lender and a single monthly payment. Loans may be unsecured or secured against your home. Benefits include potentially borrowing more than a balance‑transfer card allows and having a fixed repayment schedule. On the downside, there may be early‑repayment or arrangement fees and you could pay more interest overall if you extend the term. Secured loans carry the additional risk that your home could be repossessed if you cannot keep up the payments.
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Need more general information about formal debt solutions?
If you’re struggling with debt, you may want to learn more about options like DMPs, IVAs or DROs. You can read impartial guidance at MoneyHelper or speak to a free debt charity such as StepChange, National Debtline or Money Advice Trust.
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This comparison is general information only and does not constitute financial advice. Always seek individual advice from an FCA‑regulated adviser or free debt charity before making decisions.