Debt consolidation: turn several debts into one repayment

Juggling several repayments each month is expensive twice over: high card rates, and the late charges that follow when a due date slips. Consolidation is the simple idea of paying all of them off with one loan, then repaying that loan once a month. It works well for some situations and badly for others. Here is how to tell which is yours.

When consolidation makes sense

• You carry balances on two or more cards at the full rate, and only manage the minimum each month.
• Your existing loans have higher effective rates than the consolidation loan on offer.
• You keep missing due dates because there are too many of them.
• You have a plan for not using the cleared cards again.

When it does not

• The debts are small and you could clear them within a few months anyway.
• The consolidation loan's tenure is so long that its total interest exceeds what you pay now, even at a lower rate.
• The problem is spending, not the number of due dates. A consolidation loan gives spending a fresh set of empty cards.
• You are already unable to pay what you owe. Borrowing more is not the answer; see the section on AKPK below.

Step 1: List every debt

Write down each debt with four numbers: the balance, the interest rate, the monthly payment you actually make, and how long it would take to clear at that payment. Card statements now show how long the minimum payment would take; use that figure.

Step 2: A worked example

Kumar has three balances:

Paying minimums, the two cards would take years to clear and cost several thousand ringgit in interest along the way.

A consolidation loan of RM 12,000 at MyOneCredit's flat rate of 4.88% a year:

The 36-month plan clears everything in three years for RM 1,756.80 in interest, at an instalment about half of what Kumar pays now. The 60-month plan has the smallest instalment but costs RM 1,171.20 more. The right choice is the shortest tenure whose instalment still leaves a buffer; our affordability guide shows how to find it.

Step 3: Include every cost

For the consolidation loan, that means interest plus stamp duty of 0.5% of the amount, paid once at signing. For the debts you are clearing, check whether any has an early settlement charge. Card balances have none; some loans do. Ask in writing before you decide.

Step 4: Clear the debts the same day

When the loan is paid into your account, pay off each debt immediately and keep the settlement confirmations. Then decide what to do with the cards. Cancelling every card is not always wise, because a long-held card helps your credit record, but reduce limits, remove saved card details from shopping apps, and keep at most one card for genuine emergencies.

Habits that keep the balance at zero

• Pay the new instalment by standing instruction on payday.
• Set the cleared cards to full-payment auto-debit so a balance can never build up again.
• Put the difference between your old payments and the new instalment into savings for the first few months. That buffer is what stops the next surprise going back onto a card.
• Check your CCRIS report after a few months to confirm the cleared facilities show a zero balance. Our CCRIS and CTOS guide explains how.

If you cannot keep up

Agensi Kaunseling dan Pengurusan Kredit, AKPK, is a Bank Negara Malaysia agency that offers free credit counselling and a debt management programme, under which it negotiates a single repayment plan with your banks. If your debts are already more than you can service, that is a better first call than any new loan, including ours.

Common questions

Will consolidating hurt my credit record? A new loan appears on your report, and the cleared facilities show zero balances. Over time, one instalment paid on time every month is better for your record than several minimums paid late.

Can I consolidate a loan from another moneylender? You can use a loan for any lawful purpose, including settling other debts. Get a settlement figure in writing from the other lender first.

How much can I borrow? MyOneCredit lends from RM 1,000 to RM 1,000,000, assessed individually on income, commitments and repayment history. All our loans are unsecured; no collateral or guarantor is needed.

Next steps

Work out your total on the calculator, check what documents you will need, then message us on WhatsApp with the amount and tenure you have in mind. Nothing is paid before your loan is disbursed.