Debt Consolidation Calculator
See if debt consolidation can save you money. Compare your current debt payments to a single consolidation loan with a potentially lower interest rate.
Your Current Debts
Consolidation Loan Terms
Consolidation Comparison
Detailed Comparison
Consolidation Recommendation
Enter your debt information to see if consolidation makes sense for you.
Pros of Debt Consolidation
- Single monthly payment instead of multiple
- Potentially lower interest rate
- Fixed payoff date
- May improve credit score over time
- Simpler budgeting
Cons of Debt Consolidation
- May pay more interest if term is extended
- Upfront fees may apply
- Requires good credit for best rates
- Doesn't address underlying spending habits
- Risk of running up new debt on freed cards
Important Considerations
Debt consolidation works best when you have high-interest debt and can qualify for a significantly lower rate. It's not a solution if you'll continue accumulating new debt. Consider closing or cutting up credit cards after consolidation to avoid temptation.
Frequently Asked Questions
Initially, applying for a new loan may cause a small temporary dip. However, if you make payments on time and reduce your credit utilization, consolidation can improve your credit score over time.
Be cautious of debt settlement companies that charge high fees. Consider working directly with a bank, credit union, or reputable online lender. Non-profit credit counseling agencies can also help.
Balance transfers with 0% intro APR can be great for smaller amounts you can pay off quickly. Personal loans offer fixed rates and terms, making them better for larger amounts or longer payoff periods.
About the Debt Consolidation Calculator
Debt consolidation combines multiple high-interest debts into a single lower-rate loan. It can simplify payments and lower total interest — but only if you don't run the original accounts back up. This page covers the math and the behavioural pitfalls.
The Formula
Savings = Sum of (Old payments) − New consolidated payment. Lifetime savings = Old total interest − New total interest. Worth it only if both are clearly positive and you commit not to add new debt.
Worked Example
Three cards: $5,000 at 22%, $8,000 at 19%, $3,000 at 24% = $16,000 total. Combined minimum payments $480/month. Consolidation loan: $16,000 at 11% for 4 years = $414/month and $3,856 total interest, versus $5,200+ at minimums over 6+ years on the cards.
Consolidation loans vs balance transfer cards
Personal loan: fixed rate, fixed term, predictable payoff. Rates 7-15% for good credit. Balance transfer card: 0% for 15-21 months then jumps to 20%+. Better if you can pay off within promo period. HELOC: lowest rate but secures consumer debt with your home — risky.
The behavioural trap
About 65% of debt-consolidators end up with the original cards back at the same or higher balance within 2 years. Without changing spending habits, you're now in worse shape than before.
Consolidation hurts credit short-term
Hard inquiry, new account, and (if you close the consolidated cards) higher utilization on what's left. Recovery typically within 3-6 months.
Common Mistakes
- Consolidating without addressing the cause of the debt. The cards fill back up.
- Closing the consolidated cards. Available credit drops, utilization on remaining cards rises.
- Extending the term to lower the monthly payment without seeing total interest paid.
Frequently Asked Questions
Does consolidation hurt my credit?
Temporarily yes (inquiry + new account). Long-term often helps (lower utilization, on-time payments).
Can I consolidate federal student loans?
Yes via federal Direct Consolidation (different from private refinance — preserves federal benefits).
This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Consult a licensed professional before making significant financial decisions.