Free Debt Consolidation Calculator
Should you consolidate your debts? Compare your current debts vs a consolidation loan. See monthly payment savings, total interest, and payoff timeline.
Debt Consolidation Calculator
Compare your current debts against consolidation options
Current Debts
Consolidation Loan
Recommended: Save $1,770 in interest. Good option to simplify payments.
Comparison
| Option | Monthly | Time | Interest |
|---|---|---|---|
| Current Debts | $390 | 4y 3m | $6,641 |
| Consolidation | $298 | 5 years | $4,871 |
Key Information
- •Consolidation works best when you get a lower rate than your current average.
- •Watch out for fees: Origination fees can reduce your savings.
- •Don't run up cards again: Consolidation only works if you stop adding new debt.
📚 Debt Consolidation Guide
💰 What is Debt Consolidation?
Debt consolidation combines multiple debts (credit cards, personal loans, medical bills) into one new loan with a single monthly payment. Goal: lower interest rate, simpler payments, faster payoff.
Example: 3 credit cards at 18-25% APR → 1 personal loan at 10% APR.
📊 Consolidation Options
Personal loan: 8-15% APR, fixed rate, 2-7 years. Balance transfer card: 0% for 12-21 months, then 15-25%. Home equity loan: 6-10% APR but risky (home = collateral).
Best for: Personal loan if good credit (680+), balance transfer if can pay off in promo period.
🏛️ Interest Rate Savings
$20K debt at 20% APR = $4K/year interest. Consolidate to 10% APR = $2K/year interest. That's $2K saved annually! Over 3 years, you save $6K+ just by lowering the rate.
Rule: Consolidation makes sense if new rate is 3-5%+ lower than current average.
💡 Personal Loan vs Balance Transfer
Personal loan: Fixed rate, predictable payments, 2-7 year term. Balance transfer: 0% intro APR (12-21 months), 3-5% transfer fee, rate jumps to 15-25% after promo.
Choose balance transfer if: You can pay off debt within promo period. Otherwise, personal loan.
📈 Payoff Timeline Impact
Lower rate = faster payoff with same payment. $20K at 20% with $500/month = 5.5 years. Same debt at 10% with $500/month = 4 years. You're debt-free 1.5 years earlier!
Strategy: Keep same monthly payment after consolidation to accelerate payoff.
⚠️ Risks & Considerations
Risks: Origination fees (1-8%), hard credit inquiry (temporary score drop), temptation to rack up new debt on paid-off cards. Don't consolidate if: You can't afford payments or haven't fixed spending habits.
Critical: Close or freeze paid-off credit cards to avoid new debt.
How to Use This Debt Consolidation Calculator
Enter All Current Debts
List each debt with balance, interest rate, and minimum payment.
Add Consolidation Loan Terms
Input consolidation loan amount, interest rate, and term length.
Compare Total Costs
Review monthly payment savings, total interest, and payoff timeline to decide.
Frequently Asked Questions
What is debt consolidation?
Debt consolidation combines multiple debts (credit cards, personal loans, medical bills) into one new loan with a single monthly payment. The goal is to get a lower interest rate, simplify payments, and pay off debt faster. For example, you might combine 3 credit cards at 18-25% APR into one personal loan at 10% APR. This saves money on interest and makes budgeting easier with one payment instead of multiple. It doesn't eliminate debt, just restructures it.
Will debt consolidation hurt my credit score?
Short-term: Yes, slightly. Applying for a consolidation loan triggers a hard inquiry (5-10 point drop). Long-term: Usually helps. Paying off credit cards lowers credit utilization (major factor in score), and on-time payments on the new loan build positive history. Your score typically recovers within 3-6 months and can end up higher than before if you manage the new loan well. Avoid closing old credit cards after consolidation—keep them open with $0 balance to maintain credit history length.
What's the difference between consolidation and refinancing?
Consolidation: Combines multiple debts into one new loan. Refinancing: Replaces one existing loan with a new loan (usually for better terms). Example: Consolidation = combining 3 credit cards into 1 personal loan. Refinancing = replacing your 7% student loan with a 4% student loan. Both can save money, but consolidation is for multiple debts while refinancing is for a single debt. You can do both—consolidate multiple debts, then refinance the consolidation loan later for an even better rate.
Is debt consolidation right for me?
Consolidation makes sense if: (1) New interest rate is 3-5%+ lower than current average, (2) You have good credit (680+) to qualify for low rates, (3) You can afford the monthly payment, (4) You've fixed the spending habits that caused the debt. Don't consolidate if: You can't afford payments, haven't addressed overspending, or would rack up new debt on paid-off cards. Also consider: origination fees (1-8%), loan term (longer = more interest), and whether you need to close credit cards to avoid temptation.