Debt Consolidation Calculator — Free Online Tool

How to Use This Debt Consolidation Calculator

This calculator compares two scenarios: keeping your current debts with their individual payments and rates, versus replacing all of them with a single consolidation loan at a new rate and term. The comparison reveals whether consolidation truly saves money or just lowers monthly payments while increasing total cost.

1. Enter all your current debts. For each debt, provide a name (for identification), current outstanding balance, annual interest rate (APR), and your current monthly payment. Include every debt you plan to consolidate: credit cards, personal loans, medical bills, store accounts, and any other unsecured debts. You can add up to 10 debts. Use your most recent statements for accurate balances and rates.
2. Set the consolidation loan rate. Enter the interest rate you expect (or have been offered) on a consolidation loan. Check rates from multiple lenders before entering this number. Personal loan rates typically range from 6% to 25% depending on your credit score. Balance transfer cards may offer 0% for a promotional period. Home equity loans typically offer 6-9%. Enter the actual rate, not the promotional rate, unless you are confident you will pay off the balance during the promotional period.
3. Set the consolidation term. Enter the repayment period in years for the consolidation loan. Common terms are 2-7 years for personal loans and up to 30 years for home equity loans. A longer term means lower monthly payments but more total interest. Try different terms to see the trade-off between monthly payment reduction and total cost savings.
4. Review the comparison. The calculator shows your current combined monthly payment, total interest, and estimated payoff time alongside the consolidation loan payment, total interest, and term. Monthly savings shows how much less you pay each month. Total interest saved shows the overall financial impact. If the consolidation scenario shows higher total interest despite lower monthly payments, the longer term is costing you more overall.
5. Consider the full picture. A lower monthly payment is not always a savings if the term is significantly longer. Compare total paid (principal plus interest) for both scenarios. Also factor in origination fees (typically 1-5% of the loan amount), which add to the consolidation cost. The best consolidation reduces both the monthly payment and the total interest paid.

After the analysis, if consolidation makes financial sense, shop for the best rate from at least 3-5 lenders. Many lenders offer pre-qualification with a soft credit pull that does not affect your score, allowing you to compare offers before committing.

Debt Consolidation Formula and Analysis

The consolidation comparison works by calculating the total cost of each scenario independently. For current debts, the calculator simulates paying each debt's minimum until payoff, accounting for interest accrual. For the consolidation loan, it uses standard amortization to calculate the fixed monthly payment over the chosen term.

Understanding the True Cost of Consolidation

The monthly savings number can be misleading. If your current debts would be paid off in 36 months with current payments, but the consolidation loan is for 60 months, the monthly payment drops significantly but you are paying interest for an extra 24 months. The total cost comparison is what matters: if consolidation costs $15,000 in total interest versus $18,000 for current debts, you save $3,000 regardless of the monthly payment difference. Always check both numbers before deciding.

Step-by-Step Consolidation Analysis Example

Consider three debts totaling $18,700 with a proposed 10.5% consolidation loan over 5 years:

1. Credit Card 1: $8,500 at 22.99%, $170/month minimum
2. Credit Card 2: $4,200 at 19.99%, $84/month minimum
3. Personal Loan: $6,000 at 14.5%, $180/month minimum
4. Current combined payment: $434/month
5. Current total interest: approximately $9,800 over 68 months (longest payoff)
6. Current total paid: approximately $28,500
7. Consolidation at 10.5%, 60 months: $401.68/month
8. Consolidation total interest: $5,401
9. Consolidation total paid: $24,101
10. Monthly savings: $32.32/month
11. Total interest saved: $4,399

In this example, consolidation saves both monthly ($32) and in total interest ($4,399). The lower rate (10.5% vs weighted average ~20%) and fixed term (60 months vs up to 68 months) both contribute to savings.

Practical Debt Consolidation Examples

These real-world scenarios show when consolidation helps, when it hurts, and how to evaluate the decision. Each example demonstrates different debt mixes and consolidation outcomes.

High-Rate Credit Cards: Strong Savings Case

Michelle has three credit cards: $6,000 at 24.99% ($120 min), $4,500 at 22.49% ($90 min), and $2,500 at 26.99% ($50 min). Total: $13,000, $260/month combined. At minimum payments only, payoff takes 10+ years with $14,200 in interest. She qualifies for a $13,000 personal loan at 9.5% over 4 years: $327/month. Despite a higher monthly payment ($67 more), the consolidation costs only $2,696 in total interest. Saving: $11,504 in interest and 6+ years of payments. For Michelle, consolidation is a clear winner because the rate drop is dramatic (from ~25% weighted average to 9.5%).

Mixed Rates: Careful Analysis Needed

Robert has a car loan ($12,000 at 5.5%, $280/month, 48 months left), a personal loan ($5,000 at 11%, $150/month, 36 months left), and a credit card ($8,000 at 21%, $160/month). Total: $25,000, $590/month. He is offered a $25,000 consolidation loan at 12% for 5 years: $556/month. The monthly savings is $34. But the current total interest is approximately $5,200, while the consolidation total interest is $8,360. Consolidation costs $3,160 more because the car loan rate (5.5%) is well below the consolidation rate (12%), and extending the term on all debts increases interest. Robert should consolidate only the credit card and personal loan, keeping the car loan separate.

Medical Debt: Special Considerations

Dr. Patel's family has $22,000 in medical bills from an emergency: $8,000 at 0% (hospital payment plan), $6,000 at 12% (medical credit card), and $8,000 at 0% (another hospital plan). Total: $22,000, $620/month combined. A $22,000 consolidation loan at 10% for 4 years: $557/month. Monthly savings: $63. But consolidation total interest is $4,736, while current total interest is only $1,440 (because $16,000 of the debt is at 0%). Consolidation would cost $3,296 more in interest. In this case, keeping the 0% payment plans and focusing extra payments on the 12% medical card using our debt payoff calculator is the far better strategy.

Debt Consolidation Tips and Complete Guide

Successful debt consolidation requires more than just getting a new loan. These tips help you consolidate effectively and avoid the most common pitfalls that cause people to end up worse off than before.

Calculate Your Weighted Average Rate First

Before seeking a consolidation loan, calculate the weighted average interest rate of your current debts. Multiply each debt balance by its rate, sum those products, and divide by the total balance. If your weighted average is 18% and the best consolidation rate you can get is 15%, the savings may not justify the effort and fees. If the consolidation rate is 10% or lower, the savings are likely substantial. This calculation also reveals whether you should consolidate all debts or only the high-rate ones, keeping low-rate debts (like a 4% car loan) separate.

Factor in All Fees and Costs

Consolidation loans may include origination fees (1-5% of the loan amount), closing costs (for home equity loans), or balance transfer fees (3-5% of the transferred amount). A 3% origination fee on a $20,000 loan adds $600 to the cost. Subtract these fees from your projected interest savings to determine the true benefit. If consolidation saves $2,000 in interest but costs $800 in fees, the net savings is $1,200, which may still be worthwhile but is less impressive than the headline number.

Close or Freeze Credit Card Accounts

The number one reason debt consolidation fails is running up new charges on the credit cards you just paid off with the consolidation loan. After consolidating, either close the card accounts or freeze them (literally: put them in a container of water in the freezer). Some financial advisors recommend keeping one card with a low limit for emergencies but removing all others from your wallet and online shopping accounts. The temptation to use available credit is powerful, and the consequences are severe: doubling your debt load with both the consolidation loan and new card balances.

Create a Post-Consolidation Budget

The monthly savings from consolidation should be directed toward an emergency fund, not increased spending. If consolidation reduces your monthly payment by $150, set up an automatic transfer of $150 to a savings account. Once you have 3-6 months of expenses saved, redirect the extra toward paying off the consolidation loan faster. This ensures the consolidation sets you up for long-term financial health rather than just temporary payment relief that leads to more borrowing.

Common Mistakes to Avoid

• Only comparing monthly payments. A $30,000 consolidation at 12% over 7 years costs $515/month and $13,260 in interest. The same amount at 10% over 4 years costs $761/month but only $6,528 in interest. The lower payment costs $6,732 more. Always compare total cost.
• Consolidating low-rate debt at a higher rate. Do not include debts with rates below the consolidation rate. A car loan at 4% should not be consolidated into a 10% personal loan. Only consolidate debts with rates above the new rate.
• Using home equity without a backup plan. Converting unsecured credit card debt to secured home equity debt means your home is collateral. If you lose your income and cannot pay, you risk foreclosure. Only use home equity if your employment is very stable and you have emergency savings.
• Skipping the math and assuming consolidation is always better. Run the numbers. If your current debts will be paid off in 2 years with focused extra payments, consolidation may not save enough to justify the fees and hassle. This calculator exists precisely for this comparison.
• Not addressing the root cause of debt. If overspending, lack of emergency fund, or income instability caused the debt, consolidation alone will not prevent it from happening again. Pair consolidation with a sustainable budget and emergency fund plan.