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Picture Book · Debt and cash flow

The debt consolidation trap

Story pages

A man in his forties sitting on a lounge watching a television showing a bright cheerful advertisement without words
Meet Pete. He has a credit card, a car loan and a personal loan, and an ad promising one easy repayment.
Three small streams flowing together into one river in a green valley
Consolidation means rolling several debts into one new loan, with one repayment to one lender.
A man closing and locking a gate behind him on a country path
It can help if the new loan costs less overall, has a clear end date, and you stop using the old credit.
A short path to a house next to a much longer winding path to the same house
But a longer term can cost more. Moneysmart's example: $20,000 at 10% over 5 years costs $25,496 in total. At 6% over 15 years, it costs $30,379.
A man looking worriedly at his house with a gentle storm cloud over it
Turning credit cards into a loan secured on your home or car can put that asset at risk if you can't keep up.
A man at a dining table comparing two papers side by side with a calculator
Pete compares the total cost before signing, not just the repayment.

The end

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Next story: Building a fence around your credit card

General advice warning. This picture book is general information only. It does not take into account your objectives, financial situation or needs, and it is not personal advice. Rules and thresholds change. Before acting, consider whether it is right for you, read any relevant Product Disclosure Statement and our Financial Services Guide, and seek personal advice. Past performance is not a reliable indicator of future performance.

Information as at 27 October 2026. Sources:

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