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Debt consolidation

Having a lot of debt in a number of different places can be stressful and hard to keep track of. If you're having difficulty managing your money, or owe to a number of credit cards, store cards or loans, then you might want to consider consolidating your debt to one monthly payment.

What is debt consolidation?

Debt consolidation is when you take all your outstanding debts and bring them together into one loan with a fixed, lower, more manageable interest rate and, in many cases, lower monthly repayments. If carefully managed, a short-term personal loan could help to ease your financial burden.

Getting on top of debt

If you are feeling financially stressed, don't wait for the situation to improve by itself. It's best to talk to a financial specialist sooner rather than later. As well as a financial burden, debt can also be an emotional one – but there are a few key steps you can take to help ease the pressure.

Set a budget

The first step is to stop spending money on unnecessary expenses. Work out your monthly essentials, such as rent/mortgage payments, bills and groceries, and set a budget. Anything that's left over can be saved or put towards paying off your debt. It may take a bit of discipline to start with, but once you get into the habit of tracking your costs it should start to become second nature. This means every time you go to the supermarket or you fill up your car with petrol, note it down. By the end of the month you'll have a better idea of where your money is going.

Analyse your finances

Next is to analyse your finances. Compare your essential expenses to your income and you will see how much you can afford to pay off every month. The Citizens Advice Bureau advises identifying priority debts – those with the most serious consequences, such as loss of home – and paying those off first. These include:

  • mortgage or rent
  • gas and electricity bills
  • council tax
  • court fines
  • child support
  • income tax or VAT
  • TV licence.

Once you have made a list of your debts and ranked them according to priority you can work on tackling the most pressing. You may decide to pay off a credit card because it has the highest interest rate, or you may want to reduce your mortgage because the penalty for defaulting is the harshest.

Talk to someone

If your expenses are greater than your income and you cannot service all of your debt, or if you are feeling overwhelmed in any way, talk to someone. Call the companies concerned and explain your circumstances. Don't allow feelings of shame or embarrassment to stop you taking action – you are not the only person experiencing financial difficulties. And it's best that you take control and make the call to them first rather than living in fear each time the phone rings.

There are a number of organisations available to contact online that are set up to help people in this situation.

  • StepChange is a registered charity dedicated to providing free and confidential debt counselling.
  • The Citizens Advice Bureau offers free, independent and confidential advice.
  • The National Debtline gives free and confidential advice, and will also send you a free information pack to help you begin to tackle your debt.

One option you could consider is to consolidate your debt with a personal loan from Tesco Bank.

Dealing with financial difficulty

Financial difficulty

Tell us and we'll do what we can to help

Are you having financial difficulties or worried about falling behind with your loan payments? Get in touch with us as soon as possible and we'll try to help you get back on track.

You can call our UK-based team on 0345 301 4971*. Our call centre is open 8am-9pm Monday to Thursday, 8am-8pm Friday, and 8am-4pm Saturday.

*This number may be included as part of any inclusive call minutes provided by your phone operator.