Debt Consolidation Calculator
Compare your current debts with a consolidation loan option and see how much you could save.
Managing multiple debts with different interest rates and payment dates can be overwhelming and expensive. Debt consolidation combines all your debts into a single loan, potentially lowering your interest rate and simplifying your financial life. Our calculator helps you compare your current debt situation with potential consolidation options, showing you total interest savings, monthly payment changes, and payoff timelines. Make an informed decision about whether debt consolidation is right for your situation.
Current Debts
Consolidation Loan Options
Consolidation Analysis
Consolidation Tips
- • Only consolidate if you get a lower interest rate
- • Consider the total cost, not just monthly payments
- • Don't run up new debt after consolidating
- • Shop around for the best consolidation rates
- • Consider balance transfer cards for short-term savings
- • Make sure you can afford the new payment
Making Sense of Your Consolidation Numbers
The Weighted Average Rate Is Your Benchmark
The calculator computes a weighted average interest rate across all your debts, meaning bigger balances count for more. That single number is your yardstick: a consolidation loan only saves you money on interest if its rate comes in below it. If your weighted average is 19% and a lender offers you 12%, that's a real win. If the offer is 18%, the fees alone might wipe out the benefit.
A Lower Payment Isn't Always a Better Deal
Here's the trap a lot of people fall into: a consolidation loan can drop your monthly payment while raising your total cost, simply by stretching the debt over more years. That's why the calculator shows both the monthly difference and the total interest difference. If the monthly payment falls but total interest climbs, you're paying for breathing room. Sometimes that trade is worth it, but you should make it with your eyes open. Try a shorter loan term and see how the numbers change.
When Consolidation Actually Helps
- • You qualify for a rate meaningfully below your weighted average
- • You're juggling several due dates and keep getting hit with late fees
- • You can comfortably afford the new payment on a 3-5 year term
- • You've addressed the spending that created the debt in the first place
When to Think Twice
Consolidation moves debt around; it doesn't erase it. If the underlying budget problem isn't fixed, it's common to consolidate, then run the newly cleared credit cards back up, ending with more debt than before. Be especially careful about securing consolidated debt with your home. A missed credit card payment hurts your credit; a missed home equity payment can put your house at risk.
Also factor in fees before you sign. Origination fees on personal loans and transfer fees on balance transfer cards come off the top, so a loan that looks cheaper on rate alone may not be once fees are included.
Frequently Asked Questions
Is debt consolidation a good idea?
Debt consolidation can be beneficial if you qualify for a lower interest rate than your current debts. It simplifies payments and can save money, but it's not a solution for overspending habits.
What types of debt can I consolidate?
You can typically consolidate credit cards, personal loans, medical bills, and other unsecured debts. Secured debts like mortgages and car loans usually cannot be included in consolidation.
Will debt consolidation hurt my credit score?
Initially, there may be a small temporary dip from the credit inquiry. However, consolidation can improve your credit over time by reducing credit utilization and helping you make consistent payments.
What's the difference between consolidation and settlement?
Consolidation combines debts into one new loan with better terms. Settlement involves negotiating to pay less than what you owe, which severely damages your credit and has tax implications.
How do I qualify for debt consolidation?
Lenders typically require a credit score of 580 or higher, stable income, and a debt-to-income ratio below 50%. Better credit scores qualify for lower interest rates and better terms.
Should I use a balance transfer or personal loan?
Balance transfer cards offer 0% promotional rates but require excellent credit. Personal loans have fixed rates and terms. Choose based on your credit score, debt amount, and repayment timeline.
What happens to my old credit cards after consolidation?
Keep old cards open to maintain credit history and improve utilization ratios. However, consider removing them from your wallet to avoid temptation to run up new debt.
Are there fees for debt consolidation?
Personal loans may have origination fees (1-8% of loan amount). Balance transfer cards often charge 3-5% transfer fees. Factor these costs into your consolidation decision.