Debt Consolidation Calculator

Debt consolidation replaces several expensive balances with one cheaper loan — if the arithmetic agrees. Enter your total card debt, its average APR and what you currently pay each month, then the consolidation loan’s rate and term, and this calculator compares the two paths: payoff time and total interest on the debts you have, against the single payment and total interest of the loan you are offered.

What Consolidation Actually Changes — and What It Does Not

A consolidation loan changes three things: the interest rate (from card APRs in the twenties to a personal-loan rate that, for decent credit, sits in the high single or low double digits), the structure (an amortising loan with a fixed end date replaces revolving balances whose minimums are designed never to end), and the administration (one payment, one date, one creditor). It does not change the amount owed, the habits that built it, or — the industry's quiet catch — the now-empty credit lines, which is why the majority of failed consolidations fail identically: the cards refill while the loan is still being paid, and the household ends with both debts. The calculator's job is the first two changes; the third is logistics; the refill risk is yours, and the honest literature on consolidation (the US Federal Trade Commission's debt relief guidance draws the line between legitimate consolidation and fee-charging "relief" operations) should be read before any company asks for money up front.

Worked Example: $18,000 of Cards at 22%

The defaults: $18,000 spread across cards at a 22 percent average APR, currently paid at $550 a month. On that path the debts die in 50.4 months with $9,740 of interest. The consolidation offer — 9 percent fixed over 4 years — prices at $447.93 a month, finishes in 48 months, and costs $3,501 of interest. The comparison, stated the way the widget states it: $6,239 of interest saved, a payment $102 lower, and a finish line two months sooner despite the lower payment — because on the card path, $330 of the first $550 payment is interest (22 percent of $18,000 is $3,960 a year), while on the loan only $135 of the first payment is. Rate is the lever, structure is the multiplier, and the example's real lesson is that a lower payment and less interest can coexist exactly when the rate gap is wide and the term is not stretched.

The Three Traps Inside a Good Offer

Term stretch. Stretch the example's loan to 7 years and the payment falls to about $290 — and total interest climbs back to roughly $6,300, eating half the saving while feeling cheaper every month. The calculator exposes it instantly: change the term and watch the interest-saved line, never the payment alone. Fees. Origination fees of 1-8 percent are common on consolidation loans; a 5 percent fee on $18,000 is $900 of the $6,239 saving gone before the first payment — add fees to the loan's interest for the true comparison, or subtract them from the saving. Secured temptation. Offers to consolidate into a home-equity loan or HELOC carry lower rates because your house is now the collateral: unsecured card debt, which a bankruptcy or default would discharge, becomes debt that can take the home. The rate saving is real and so is the risk transfer; the arithmetic on this page prices the saving honestly, and the decision paragraph belongs to you with both numbers in view.

Alternatives That Deserve a Comparison Run

Consolidation is one of four standard escapes, and the calculator's current-path line is the benchmark each rival must beat. A 0% balance transfer (priced on the interest page: fee versus interest erased inside the intro window) wins for smaller balances that die within 12-21 months. The avalanche method — minimums on everything, every spare dollar at the highest APR — costs no fees and no new credit application, and on the example's numbers (paying the same $550 with avalanche discipline) it captures much of the consolidation saving more slowly; our payment calculators model it card by card. A nonprofit credit-counselling debt management plan negotiates card APRs down (often to around 8-10 percent) without new borrowing, at a modest monthly fee, with the cards closed — for many households the strongest option of the four, and the one the FTC guidance points to first. And doing nothing differently is priced above as the control group: 50 months and $9,740 on disciplined payments, or the minimum-payment page's two-decade cautionary tale if discipline slips. Compare all four on interest and months; choose the one whose terms you can actually keep.

When Consolidation Is the Wrong Tool

The calculator's most valuable output is sometimes a refusal, and three situations produce it. The rate does not move. If your credit earns a consolidation offer at 19 percent against cards at 22, the interest saved is a rounding error that fees erase — the verdict line will show it, and the right moves are the DMP or the avalanche instead. The debt is small and short. On $3,000 that disciplined payments clear in eight months, total card interest is a few hundred dollars; a loan's fees, inquiry and paperwork buy almost nothing — pay it off and keep the credit file quiet. The income is the problem. Consolidation re-prices debt; it does not resize it. If the payment that the current path demands exceeds what the household can sustain on any terms — if the budget is negative before debt service begins — no rearrangement of the debts closes the gap, and the honest next step is the nonprofit counsellor (and, in genuinely insolvent cases, legal advice about bankruptcy, whose costs and consequences deserve counsel rather than a calculator). Notice what all three refusals share: the arithmetic said no. A lender's approval is not evidence that consolidation serves you — the lender is paid either way. This page's comparison, run before any application, is the only party in the transaction whose incentives are entirely yours.

The First Ninety Days After Consolidating

Consolidation is won or lost in the quarter after it closes, and the calendar is specific. Days 1-14: confirm every card balance reads zero (a trailing interest charge of a few dollars posts to most cards the month after payoff — an unnoticed $8 balance has grown late fees and even delinquency marks for the inattentive; this is the commonest unforced error in the entire process). Days 15-30: execute the card lockdown you chose — freeze, cut, or close — and set the loan's autopay a few days before the due date, from the account the salary lands in. Days 31-90: redirect the old card payments' full amount — remember the example freed $102 a month — to its named next job (the emergency fund, until it holds a month of expenses; then the loan itself, as extra principal). Money without an assignment drifts back to spending, and the freed payment is the consolidation's dividend; households that assign it keep it, households that "see how it goes" mostly do not. Run this calculator again at day 90 with the real balances: the comparison should now be history, and the only number left to watch is the loan's own finish date.

Related Tools

More from the Finance Calculators hub: the Credit Card Interest Calculator — the cost of the debts being replaced — the Credit Card Minimum Payment Calculator, and the Interest Rate Calculator for solving the rate on any loan offer.

Frequently Asked Questions

Will consolidation hurt my credit score?

In sequence: a small dip from the hard inquiry and the new account, then (usually) a sustained rise — the cards' utilisation collapses when the loan pays them off, and a history of on-time loan payments accrues. The two ways consolidation damages a score are the two the article warns about: refilling the cards (utilisation returns, now with a loan on top) and missing loan payments, which report exactly like missed card payments. Net over a completed plan, consolidation is one of the few debt moves that typically ends with a better score than it started.

What rate should I expect on a consolidation loan?

It is a credit-score market: excellent credit sees high-single-digit APRs, fair credit the mid-teens, poor credit rates that may not beat the cards at all — in which case the calculator will show a negative or trivial saving and the correct answer is a counselling plan instead. Pre-qualification (soft inquiry only) shows your real rate at most lenders; never judge an offer by its advertised "as low as" figure, which is priced for someone else's file.

Should I close the cards after consolidating?

The evidence cuts both ways and the honest answer is behavioural: closing removes the refill risk (the failure mode of most consolidations) but raises utilisation on any remaining lines and can shorten average account age. The common professional compromise is to keep the oldest card open with a trivial recurring charge on autopay, freeze or cut the rest, and remove all of them from wallets and saved-payment profiles. If you know the cards will refill, close them — a temporary score dip is cheaper than a second debt.

Is a debt management plan better than a loan?

For the example household, often yes: a nonprofit DMP typically cuts card APRs to roughly 8-10 percent with the cards closed and a single payment — consolidation's benefits without new borrowing, at a small monthly fee, over 3-5 years. It shows on credit reports as third-party payment (a neutral-to-mild negative during the plan) and demands the same payment discipline. The loan wins when your credit earns a genuinely low rate and you trust the refill discipline; the DMP wins when either of those is in doubt. Both must beat the current-path line on this calculator to deserve a signature.

What about debt settlement companies?

Different animal, and the FTC's guidance is blunt: settlement companies that charge advance fees are illegal under the Telemarketing Sales Rule, their method (stop paying, let accounts go delinquent, then negotiate) wrecks credit for years, settled balances over $600 can be taxable as forgiven income, and many clients finish worse than they started. Consolidation and DMPs keep payments flowing and creditors whole; settlement is a distress strategy for debts already unpayable, not a cheaper route for debts that are merely expensive. This page's comparisons all assume the legitimate end of the market.