Debt Consolidation Calculator
Compare your current debt payments vs. a consolidation loan. See potential savings in interest, monthly payments, and payoff time.
Want to compare payoff strategies instead? Try the Debt Payoff Calculator or Snowball vs. Avalanche comparison.
Your Current Debts
Leave blank to consolidate all debts
The interest rate on your consolidation loan
Debt Consolidation: Is It Right for You?
✅ When Consolidation Makes Sense
- You can secure a significantly lower interest rate
- You want to simplify multiple payments into one
- You have the discipline to avoid new debt
- You're paying mostly interest each month on credit cards
- You have a plan to use the savings wisely
❌ When to Avoid Consolidation
- You can't get a lower interest rate
- You'll extend the repayment period too much
- You're likely to accumulate new debt
- You're using secured assets (home) as collateral
- Fees outweigh potential interest savings
Frequently Asked Questions
What is debt consolidation?
Debt consolidation is the process of combining multiple debts into a single loan with one monthly payment. This can simplify your finances and potentially reduce your interest rate, monthly payment, or both. Common consolidation methods include personal loans, balance transfer credit cards, and home equity loans.
When does debt consolidation make sense?
Debt consolidation makes sense when: 1) You can secure a lower interest rate than your current debts, 2) You want to simplify multiple payments into one, 3) You have the discipline not to accumulate new debt, and 4) The fees associated with consolidation don't outweigh the benefits. It's especially beneficial for high-interest credit card debt.
What are the risks of debt consolidation?
Risks include: 1) Extending the repayment period, which may increase total interest paid despite lower rates, 2) Accumulating new debt on paid-off credit cards, 3) Potentially higher fees that offset interest savings, and 4) Using secured loans (like home equity) which put assets at risk. The key is having a plan to avoid new debt after consolidation.
How much can I save with debt consolidation?
Savings depend on your current debt rates, the consolidation loan rate, and loan terms. Typical savings range from $100-500+ per month in interest, with total savings of $2,000-15,000+ over the loan term. Use this calculator to see your specific numbers.
Should I consolidate my debt or pay it off faster?
If you can secure a significantly lower interest rate (2%+ difference), consolidation can save money. However, if you're close to paying off your debts, the fees and extended timeline of consolidation might not be worth it. Consider your discipline level — consolidation works best when paired with a budget and spending plan.