Aussie spending: Why now’s the time to consolidate your debt

Aussie spending has been turbulent in 2020, with the devastating effects of the bushfires into the outbreak of COVID-19.  

In fact, according to Deloitte Access Economics’ latest quarterly Retail Forecasts subscriber report (Q2, 2020), retail spending has been a rollercoaster so far this year. 

The report revealed that after the surge in spending growth in the March quarter, Deloitte predicts that it will contract again by 4.0% in the June quarter. 

“2020 has been a tumultuous year for retailers. We’re not even halfway through, but across the whole sector we expect calendar 2020 to register a record breaking fall in real retail sales,” Deloitte Access Economics partner and Retail Forecasts principal author David Rumbens said.

“But while the average is dire, there may not be many retailers performing at the average – many will fare much worse, while supermarkets, pharmacies and hardware, amongst others, have been experiencing a golden run.”

 Source: ABS Cat 8501.0, Deloitte Economics

It’s no secret that there has been a massive swing in consumers’ ability and willingness to spend. For some it has been a time to cut back and save or pay down debt, while others are splurging more than usual as they shop from home.

“Consumer willingness to spend will likely be buffeted by a number of different factors, meaning that one month’s trading experience may be a terrible guide to how the year as a whole pans out,” Rumbens said.

So, no matter which side of the spender-saver fence you sit on, if you are nestling old or new debt, it may be time for you to bid it farewell with a debt consolidation loan. 

How does a debt consolidation loan work?

A debt consolidation loan is a type of personal loan where you can combine a range of different debts and pay them back under one (and in some instances lower) interest rate. This could include credit card debt, store cards, other personal loans or car loans. 

Essentially, this loan rolls your debts into one so you only have to remember one loan term, one repayment due date, one repayment amount and one interest rate.  

Is a debt consolidation loan right for you? 

It all depends on your debts and your personal circumstances. In some cases, this type of loan could end up not only saving you money but also time and hassle as well. 

Here are some examples of when a debt consolidation loan may be a good idea: 

• You find having multiple repayment due dates confusing 

• You have a number of different debts with high interest rates 

• You are unsure about which debts you should prioritise 

• The benefits of a debt consolidation loan outweighs the disadvantages (for example, a longer loan term doesn’t end up costing you more than paying off your debts separately). 

On the other hand, if you are already on top of your debt repayments, or have almost paid it down in full, a debt consolidation loan may not be worth it. 

Similarly, it’s important to keep in mind that these types of loans are designed to help you pay down your debt. So if a debt consolidation loan is likely to cost you more in interest, it may be a better idea to pay down your debts separately. 

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Need a place to start looking for a debt consolidation loan? Check out the list below or jump over to our personal loan comparison table.