Debt Consolidation Calculator

How Debt Consolidation Works

Debt consolidation replaces several high-interest debts — typically credit cards at 20%+ APR — with a single personal loan at a lower fixed rate. You keep one payment, one due date, and a firm payoff date instead of open-ended revolving debt. Whether it saves money comes down to three numbers: the new APR, the loan term, and any origination fee (often 1–8% of the loan). A lower rate helps; a longer term and fees push the other way, which is why some "lower monthly payment" offers actually cost more in total.

Worked Example

Say you owe $15,000 across cards at an average 22% APR and pay $450 a month. On that path you'd be debt-free in about 4 years and pay roughly $6,800 in interest. Consolidating into a 48-month loan at 11% with a 3% fee gives a payment of about $399 a month and around $4,200 in interest and fees — saving roughly $2,600 and $50 a month. Stretch the same loan to 72 months, though, and the "cheaper" payment quietly erases most of that saving.

Consolidation Mistakes to Avoid

• Judging by the monthly payment. A longer term nearly always lowers the payment while raising the total cost — compare total interest + fees, not the monthly figure.
• Ignoring the origination fee. A 5% fee on $15,000 is $750 added to your debt on day one; it can wipe out the benefit of a modest rate drop.
• Running the cards back up. Consolidation frees your card limits — new spending on top of the loan is how people end up with double the debt.
• Overlooking a 0% balance transfer. For smaller balances you can clear within 12–21 months, a 0% transfer card (typical 3–5% fee) often beats a loan.

Frequently Asked Questions