Debt consolidation can genuinely help — or quietly make things worse — depending on the numbers and your own spending habits going forward. Work through this checklist before committing to any consolidation option.

Step 1: List everything you owe, accurately

  • Every debt, its current balance, interest rate and minimum monthly payment
  • Your total monthly minimum repayments across all debts combined
  • Your total monthly income and essential outgoings, to see what's genuinely available
Skipping this step and estimating roughly is the single most common reason consolidation plans don't work out as expected — get exact figures from statements, not memory.

Step 2: Work out your blended interest rate

Calculate the weighted average interest rate across your current debts. This is the number a new consolidation option genuinely needs to beat — comparing a new loan's rate against your single highest-rate debt alone can be misleading if your other debts carry much lower rates.

Step 3: Check whether you're simplifying or in genuine difficulty

  • Simplifying manageable debt: You're keeping up with payments but want one payment and potentially a lower rate — most consolidation options are worth considering
  • Genuine financial difficulty: You're struggling to meet minimum payments — a free debt management plan via a charity such as StepChange may be more appropriate than taking on new borrowing

Step 4: Compare consolidation options on total cost

  1. Unsecured consolidation loan — check the total repayable, not just the monthly payment
  2. 0% balance transfer card — check the fee and, critically, what happens once the promotional period ends
  3. Secured (homeowner) loan — check the rate improvement against the risk of securing debt against your home
  4. Mortgage further advance/remortgage — check whether spreading short-term debt over a much longer term increases total interest paid, even at a lower rate

See our full roundup of debt consolidation strategies for a fuller comparison of each option, and model your specific numbers with our Debt Consolidation Savings Calculator.

Step 5: Check your eligibility realistically

  • Check your credit report before applying, so you know roughly what rates you're likely to be offered
  • Use soft-search eligibility checkers where available, to avoid unnecessary hard searches
  • Confirm the new monthly payment is genuinely affordable against your real budget, not an optimistic one

Step 6: Plan for what happens to your old credit accounts

  • Decide whether to close cleared credit accounts or keep them open with zero balance
  • If keeping any open, remove saved card details from regular spending apps to reduce temptation
  • Set a firm personal rule against using cleared credit for new spending

The single biggest risk to watch for

The most common way debt consolidation goes wrong isn't a bad rate — it's continuing to spend on cleared credit accounts, effectively creating new debt on top of the consolidated amount. Whichever option you choose, pair it with a genuine plan to avoid this.

The bottom line

A good debt consolidation decision starts with accurate numbers and an honest look at whether you're simplifying manageable debt or facing genuine difficulty — work through each step above before committing, rather than choosing based on the first offer that appears.

This article is for general information only and does not constitute financial, legal or tax advice. Rates, thresholds and eligibility criteria change over time — always check current terms with the lender or an FCA-regulated adviser before making a decision. See our full terms and disclaimer.