What is debt consolidation?

Debt consolidation combines multiple debts into a single loan, ideally with a lower interest rate. This simplifies payments and may reduce total interest cost.

What types of consolidation loans exist?

Options include personal loans, home equity loans/HELOCs, balance transfer credit cards, and debt management programs. Each has different rates, terms, and qualification requirements.

When does consolidation make sense?

Consolidation helps when you can secure a significantly lower rate, want one simple payment, and commit to not accumulating new debt on paid-off accounts.

What are the risks of debt consolidation?

Risks include securing debt with your home (HELOCs), paying more total interest with longer terms, and running up new debt on cleared credit cards.

How much can consolidation save me?

Savings depend on current vs. new interest rates and terms. Consolidating 20% APR credit cards into an 8% personal loan can save 50%+ in interest if paid on similar timeline.

Will consolidation hurt my credit score?

Initially, scores may drop slightly due to new credit inquiry and account. Over time, scores typically improve with consistent payments and lower credit utilization.

Should I close credit cards after consolidation?

Keep older cards open (helps credit history length) but put them away. Closing cards can hurt utilization ratio and average account age. Only close if temptation is too great.

What consolidation option is best for me?

Compare total interest cost, monthly payments, and risks. Personal loans offer fixed rates/terms. Balance transfers have 0% periods. Home equity has lowest rates but secures your home.

Debt Consolidation Calculator

Compare consolidation loan vs current debts

Instant results•No signup•Estimates only

Current Debts

Total Debt Balance

Avg APR

Total Payment

Consolidation Loan

New APR

Term

Current Payment

$750

Consolidation Payment

$658

Monthly Savings

+$92

Interest Savings

+$7,390

Payoff Time

4 yrs 0 mo

✓ Consolidation saves money

Visualization

Payment Strategy Comparison

Time to Payoff

Total Interest Paid

Current(4yr 8mo)

1.5x Payment(2yr 8mo)

2x Payment(1yr 11mo)

Results are estimates based on current balances and interest rates.

Results are estimates for informational purposes only and do not constitute financial advice. Actual payoff timelines may vary based on interest rate changes, fees, and payment consistency.

How calculations work Full disclaimer

Debt Consolidation Calculator Formula

Savings = \sum I_{current} - I_{consolidated}

Consolidation savings equals total interest on current debts minus interest on the consolidated loan. This calculation determines whether combining debts at a new rate is financially beneficial.

How the Debt Consolidation Calculator Works

1Enter all current debts with balances, rates, and payments
2Specify the potential consolidation loan rate and term
3Compare current total payments to consolidation payment
4View total interest under each scenario
5Determine if consolidation saves money

Debt Consolidation Calculator Key Terms

Debt Consolidation: Combining multiple debts into a single loan, ideally at a lower interest rate, to simplify payments and reduce costs.
Balance Transfer: Moving credit card balances to a new card, often with 0% promotional APR, as a form of consolidation.
Personal Consolidation Loan: An unsecured loan used to pay off multiple debts, replacing them with one fixed payment.
Weighted Average Rate: The average interest rate of all current debts, weighted by balance—used to compare against consolidation rate.

Debt Consolidation Calculator Tips

•Consolidation only helps if the new rate is lower than your weighted average
•Don't extend the term so much that you pay more total interest
•Address the behavior that created debt—consolidation without change leads to more debt
•Include all consolidation fees in your comparison
•Avoid using freed-up credit cards after consolidating

When to Use This Debt Consolidation Calculator

✓You have multiple high-interest debts
✓You qualify for a lower rate consolidation loan
✓You want to simplify multiple payments into one
✓You're committed to not adding new debt
✓You want a fixed payoff timeline

Debt Consolidation Calculator Examples

Credit Card Consolidation

Cards:$15K total @ 22% avgNew Loan:$15K @ 10% for 48 mo

Result:$4,200 savings

Consolidating $15K from 22% to 10% saves $4,200 and cuts payoff from 8 years to 4.

Mixed Debt Consolidation

Total:$25,000Current Payments:$750New:$580/mo @ 8%

Result:$170/month savings

Lower rate and structured term reduces payment by $170 while ensuring payoff in 48 months.

Break-Even Analysis

Total:$10,000Fee:$300Rate Drop:20% to 12%

Result:Break-even in 3 months

Consolidation fee is recovered in 3 months through interest savings.

Understanding Debt Consolidation in Depth

Debt consolidation can simplify finances and reduce interest costs—but only under the right circumstances. This calculator helps you analyze whether consolidation makes financial sense for your specific situation.

When Consolidation Works

Consolidation is beneficial when: your consolidation rate is lower than your weighted average current rate, the term is short enough to actually save money, you're committed to not running up new debt on paid-off cards, and fees don't eat up the savings.

The Hidden Trap

Many people consolidate credit card debt, feel relieved at the lower payment, then gradually charge up the paid-off cards again. Now they have the consolidation loan PLUS new card balances—worse than before. Consolidation without behavior change often backfires.

Types of Consolidation

Balance Transfer Cards: 0% promotional rates (12-21 months) can save significant interest if paid off during the promo. Watch for transfer fees (typically 3-5%) and the post-promo rate.

Personal Loans: Fixed rate and term provide certainty. Rates vary widely (6-36%) based on credit. Best for those who need structure.

Home Equity: Lower rates but puts your home at risk. Interest may be tax-deductible. Long terms can mean more total interest despite lower rate.

Calculating True Savings

Compare total interest paid under current scenario versus consolidation. Include all fees. Consider the term—a lower rate over a longer term might cost more total. And factor in the risk of running up new debt on available credit.

Debt Consolidation Calculator FAQs

Browse more tools in Debt Calculators

Related Calculators

Debt Payoff Calculator

Plan your debt-free timeline and payment strategy

Loan Payment Calculator

Calculate monthly loan payments and total interest

Credit Card Interest Calculator

Calculate interest charges on credit card balances

Marcus Chen

Financial Analysis Specialist

Marcus has over 12 years of experience in quantitative finance and personal financial planning. He specializes in loan analysis, investment modeling, and consumer debt strategies. His methodologies incorporate industry-standard financial mathematics used by major lending institutions.

Content reviewed: January 2026Next review scheduled: 2027

Editorial Standards: All calculations use industry-standard financial formulas. Content is reviewed for mathematical accuracy and updated to reflect current market conditions. This tool provides estimates for informational purposes and does not constitute financial advice.