Debt Consolidation

Monday 21st Jan, 2019

The Good, The Bad & the Ugly

Life can put a lot of financial pressures on us. Whether it’s a necessity or it’s living to our own aspirations, it’s very easy to find ourselves paying out a lot of money on multiple forms of credit, and it’s not unusual.

That car loan, the credit cards that you ran up over Christmas, the expensive summer holiday that you needed extra money to make extra special, the wedding, the new double glazing, the boiler breakdown, that leaking roof… it all adds up and before you know it, a large chunk of your monthly income is going in repaying credit.

It can also be confusing. Different credit cards, loans and hire purchase agreements all with different terms, at different interest rates and repayments can cause us to lose track and start to lose control of our finances which can lead us to worry, stress, illness.

So it might seem like a great idea to just consolidate everything into one loan.

You might be right… you might be wrong… so let’s look at the good, the bad and the ugly of debt consolidation;



Done right, a debt consolidation loan can help you to reduce your outgoings, improve your finances, bring all of your credit into one affordable monthly payment and reduce the interest rate you are paying on your debts, saving you money. It can also put a definite end date to those endless credit card bills and help us to rationalise our budgets. All good stuff!


There are things that you need to consider when looking at debt consolidation. You need to understand why you have those debts in the first place and how you will avoid running them up again. You need to look carefully at your budget, make sure you can comfortably afford repayments on the new loan and consider closing down the credit cards or other credit accounts that you will be clearing with the consolidation loan.  Without this, you could end up in a bad situation.


Sometimes, a debt consolidation loan is the worst thing you could possibly do. If you owe a huge sum on multiple credit lines and you’re not sure where it all came from. If the balance has built up paying for “bits & pieces”, “general living expenses” or other vague reasons that you aren’t quite sure of. If you absolutely need to use those credit lines to pad out your monthly income and you are spending more than you earn by using credit, then another credit line is not the answer.

If a debt consolidation loan doesn't clear all of your debt then stop and look again! You could be just re-arranging the deck chairs on the Titanic!

If you've already taken a debt consolidation loan and are now looking for another.... stop! There's a problem that another loan won't solve on its own!

If debt collectors are calling, your credit is defaulting and CCJs, IVAs or bankruptcy is staring you in the face then you need to stop borrowing immediately and, if you haven’t already, seek debt advice. You cannot borrow yourself out of debt!


It’s not all bad news. Once you’ve examined and understood your credit balances, done a thorough income and expenditure and are sure that debt consolidation can be affordable to you, would save you money or just make life easier, there are some great options out there. You can get help with your budget here

For BAE Systems people there’s a simple, straightforward option with an easy way to pay. A debt consolidation loan from your own internal not-for-profit payroll lender, with no joining fee, no arrangement fee, and no early settlement fees. First Rate Credit Union.

Consolidate up to £15,000 with payments coming straight from your payroll. 

So simple… it’s genius


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