How direct settlement technology can transform debt consolidation

Two‑thirds of people (65%) say their current debts influence the financial decisions they make from saving to making bigger purchases. Yet only 17% feel they really understand and know a lot about how debt consolidation works, despite its ability to simplify repayments and reduce interest costs.   

This gap matters because our analysis shows that people could save an average of £1,257 a year in interest by consolidating unoptimised debt. And if there was broader adoption of debt consolidation technology, it could also unlock £15.1 billion in household spending and generate £2.1 billion in extra savings annually. 

Perhaps more critically, when people don’t know what options exist, they often turn to riskier ones. Research in 2023 found 3 million people had used an unlicensed lender or loan shark, and more than 10 million borrowed from friends or family. 

As more people juggle different commitments, the industry has both an opportunity and a responsibility to help them find safer, simpler ways to manage their finances. That starts with improving awareness, reviewing current processes and prioritising the use of debt consolidation tools. 

Direct settlement is one of the most effective digital tools for making consolidation safer and simpler. Instead of giving someone a lump sum and asking them to pay off multiple debts themselves, direct settlement works behind the scenes, calculating final settlement figures and paying creditors directly.  

This then moves the customer onto one monthly payment, and lenders assess only the new loan rather than counting old debts twice. 

We’ve seen how effective this can be. ReFi, Experian’s direct settlement technology, has helped some lenders increase successful consolidation applications by 68%, supporting the settlement of over £70 million of consumer debt over the past year. And recent activity on Experian’s Marketplace shows one in three loan searches is now for debt consolidation, while demand in balance transfer cards has risen 8.5% in the past year. 

So where do we go from here? Three things stand out:

• Make consolidation easier to understand. People need simple, straightforward explanations so they can judge whether consolidation is right for them. 
• Build journeys that genuinely reduce stress. The right tools and processes help remove unnecessary steps and ensure repayments end up in the right place. 
• Create consistency across the industry. When organisations work together and create similar standards, people get clearer, more reliable support. 

Now is the time to move. With better awareness, smoother customer journeys and modern digital tools, more people can make use of debt consolidation when they need it most, helping build a more resilient financial landscape for everyone.

The conversation continues at Credit Week! Find out more!