Juggling several credit cards and loans means several due dates, several interest rates and a lot of money lost to interest. A debt consolidation loan replaces them with one fixed payment, ideally at a lower rate and with a firm payoff date. Whether it actually saves money depends on the new rate, the term and the fee. This debt consolidation calculator compares the loan with keeping your current payments, so you can see the difference in monthly cost, total interest and time.
How to use the debt consolidation calculator
- List each debt you would pay off, one per line: name, balance, APR, monthly payment. Use what you actually pay each month, not just the minimum.
- Enter the consolidation loan’s interest rate and term in months.
- Enter the origination fee. The calculator assumes the lender deducts it from the proceeds, so it raises the amount you borrow until the debts are fully paid.
How the comparison works
Current plan. Each debt keeps getting its current payment, with interest at APR ÷ 12, until it is paid off. Freed-up payments are not rolled into other debts.
Consolidation loan. The amount borrowed covers the payoff plus the fee:
The APR is the rate at which the payments repay only the cash that actually reaches your creditors. That makes the fee part of the true cost, the same idea behind the APR on your Truth in Lending disclosure.
Worked example
Three cards total $14,400 at a balance-weighted 24.46%, with $450 a month in payments:
| Debt | Balance | APR | Payment |
|---|---|---|---|
| Visa | $8,200 | 24.99% | $250 |
| Mastercard | $4,300 | 21.9% | $130 |
| Store card | $1,900 | 27.99% | $70 |
Keeping those payments clears everything in 4 years, 8 months at a cost of $9,234 in interest.
A 48-month loan at 11.99% with a 5% fee:
- Borrow $14,400 ÷ 0.95 = $15,157.89, so the fee is $757.89.
- Payment: $399.09 a month, $50.91 less than now.
- Interest $3,998.48 + fee $757.89 = $4,756.37, an APR of 14.77%.
- Savings: $4,478, and you are debt-free 8 months sooner.
Better still, keep paying the old $450 on the new loan. It is then gone in 3 years, 6 months, with $4,172 of interest and fees.
When consolidation makes sense
- The new APR is clearly lower than the weighted rate you pay now. Compare APRs, not just advertised rates.
- You can qualify without a large fee. Fees of 6% to 10% can erase much of the benefit on short terms.
- You won’t add new debt. Consolidation clears the cards, and the savings are lost if they fill up again.
- The term isn’t stretched too long. A low payment over seven years can cost more than your current plan.
Alternatives worth comparing: a 0% balance transfer for card debt you can repay within the promo period, in the balance transfer calculator. A home equity loan or HELOC offers a lower rate but puts your house at risk. And the debt avalanche keeps your current accounts and simply pays them in a smarter order, in the debt payoff calculator. To price a loan offer on its own, use the personal loan calculator.
Estimates only, not financial advice. Your offer's rate, fee and terms depend on your credit; the lender's Truth in Lending disclosure has the official APR.
Frequently asked questions
Does debt consolidation save money?
It saves money when the new loan's total cost, including interest and fees, is lower than what you would pay on your current debts at your current pace. In the default example, consolidating $14,400 of card debt averaging 24.46% into a 48-month loan at 11.99% with a 5% fee saves about $4,478 and lowers the payment by $50.91 a month.
How does an origination fee affect a consolidation loan?
Most lenders take the fee out of the loan proceeds. To pay off $14,400 with a 5% fee, you must borrow $15,157.89. The fee raises the true cost, so a loan advertised at 11.99% has an APR of about 14.77% over 48 months.
Is a longer consolidation term better?
A longer term lowers the payment but adds interest. For the example debts, 36 months costs $503.39 a month and saves $5,513, while 60 months costs $337.10 and saves $3,408. Choose the shortest term whose payment you can reliably make.
Will consolidating hurt my credit score?
The application causes a hard inquiry, and a new account lowers your average account age, so your score may dip briefly. Paying off revolving card balances usually lowers your credit utilization, which often improves your score over the following months, as long as the cards aren't run up again.