Debt Consolidation Calculator

Is Debt Consolidation Right for You?

Debt consolidation involves taking out a new loan (usually with a lower interest rate) to pay off multiple existing debts. This leaves you with just one monthly payment. This Debt Consolidation Calculator helps you do the math to see if this move actually saves you money or just shifts the burden.

When to Consolidate

• Lower Interest Rate: Your new loan's APR should be significantly lower than the weighted average (blended) rate of your current credit cards.
• Simplified Bill Pay: Instead of tracking 5 due dates, you have 1.
• Improved Cash Flow: Extending the term can lower your monthly payment, freeing up cash for emergencies (though this may cost more interest long-term).

The "Trap" of Extending the Term

Be careful! If you consolidate $10,000 of credit card debt into a 5-year loan to get a lower monthly payment, you might end up paying more total interest than if you had aggressively paid off the cards in 2 years, even at a higher rate.

Look at the "Total Interest Savings" box above. If it's red (negative), you are paying for the convenience, not saving money.

Origination Fees

Many personal loans charge an origination fee (typically 1% to 8% of the loan amount). This fee is usually deducted from the loan proceeds.
Example: You borrow $10,000 with a 5% fee. You receive $9,500 but owe $10,000. This calculator adds the fee to your required loan amount to ensure you have enough cash to pay off your old debts.