Unlock Your Fresh Start – Smart Tips for Consolidating Debt
Debt is still a taboo topic among UK adults, even in 2025. It is thought that UK households have on average £66,892 as of March 2025, which is a significant amount.
Dealing with this debt can feel intimidating. It can sometimes be difficult to know where to start and where you can get support from. There are different avenues you can explore, but one choice is debt consolidation. Here are some tips on how to consolidate your debts.
Understand what debt consolidation means in 2025
The term “debt consolidation” may be a new concept to you. In simple terms, debt consolidation is where you take out a new loan to pay off multiple existing debts. By paying off your debts, you are left with one loan, but this could potentially mean a higher interest rate.
Debt consolidation loans are becoming increasingly popular in the UK. Successfully using one leaves you with one monthly payment rather than multiple, which can reduce stress as well as simplify your finances.
Assess your financial situation before choosing a method
Before you can make any changes, you need to assess your financial situation. This may be unpleasant if you have been avoiding it, but it is necessary to have a realistic picture.
Start by making a note of any debts you have, plus their interest rates. Then rank them by those rates, prioritising the loans with higher interest.
Next, examine your income against your outgoings. Don’t forget to include bills, subscriptions and commuting costs. If you have any money left at the end of the month, put it towards your debts with the highest interest. By focusing on these first, you are saving yourself money in the long run. If not, it is time to consider other options such as debt consolidation.
Follow the steps to consolidate successfully
Once you feel comfortable proceeding with debt consolidation you can begin to compare different lenders. Make sure you research thoroughly and continue with a legitimate provider – services regulated by the FCA are recommended.
Next, it is time to apply for a loan. The application process is usually quite rigorous with lenders requiring a lot of details. You will be asked about the amount you need, your income and expenses, and even your employment. This is all to make sure you are able to repay the loan.
Before you commit to anything, be sure to read the terms carefully. This is where you will find information about payment schedules, what happens if you miss a payment and other important details. Ensure you are confident that you understand it all before sealing the deal.
Once the money hits your bank account, get your affairs in order. The longer it sits there, the higher the chance that it will be used for something else and you won’t see an improvement.
Top image by insung yoon on Unsplash
