Debt consolidation replaces several unsecured balances with one new loan. Credit card balances and an arranged overdraft are included in the amount borrowed, and the proceeds are used to clear those balances. Instead of making separate card payments and managing an overdraft, the borrower makes one fixed monthly repayment over an agreed term.
Updraft combines eligible credit card and overdraft balances into one fixed-rate loan with a fixed end date. The arrangement fee forms part of the total amount repayable, so it should be included when comparing the loan with the existing balances. Depending on the lender’s process, payments may be made directly to card providers or transferred to the borrower’s bank account so the balances can be settled.
The relevant comparison is the total cost of continuing with the cards and overdraft against the total cost of the consolidation loan. This includes interest, fees, the loan term and the monthly repayment. A lower monthly payment does not necessarily mean a lower overall cost if the new loan runs for longer. Once cards are cleared, continued spending on them can also create new balances alongside the loan repayment.
Before applying, borrowers should list each balance, interest rate, minimum payment and any charges. The overdraft should be treated as a balance that can remain open indefinitely unless it is reduced or cleared. A consolidation calculator can show how changing the term or repayment affects the projected end date and total repayable.
Lenders normally assess income, regular spending and credit-file information rather than relying on the credit score alone. An eligibility check may use a soft search, which does not affect the credit file in the same way as a full application. Approval is not automatic, and the offered rate, amount and term depend on the lender’s assessment.
After consolidation, the borrower remains responsible for the new loan until it is repaid. The old card accounts can be closed, frozen or kept open according to the borrower’s circumstances and the providers’ terms. Checking statements confirms that the card and overdraft balances have actually reached zero and helps prevent missed payments during the transfer.