What Is a Debt Consolidation Calculator?
This calculator compares your current multiple debts (each with its own rate and payment) against a single consolidation loan offer, showing whether combining your debts into one loan could reduce your interest costs and simplify payments.
How to Use the Debt Consolidation Calculator
- Add each current debt with its balance, interest rate, and minimum payment.
- Enter the interest rate and term of the consolidation loan you're considering.
- Compare total interest between your current debts and the new consolidated loan.
How the Comparison Works
Worked Example
Combined balance: $13,000
Consolidation loan: 10% APR, 4-year term
New monthly payment: approximately $329
Consolidation can reduce total interest if the new rate is meaningfully lower than a blended average of the old rates.
Understanding Your Results
Consolidation is most beneficial when the new loan's rate is significantly lower than your current average rate, especially for high-interest debt like credit cards. It can also simplify your finances into a single monthly payment, though it's worth confirming there are no origination fees that offset the interest savings.
Common Mistakes to Avoid
- Consolidating without confirming the new rate is genuinely lower than your current blended rate.
- Running up new balances on paid-off credit cards after consolidating, which can worsen overall debt.
- Ignoring origination fees on the consolidation loan, which reduce the actual savings.
Frequently Asked Questions
Not always — it's most beneficial when the new loan's interest rate is meaningfully lower than your current average rate. Compare total interest cost, not just the monthly payment, before deciding.
This depends on your credit profile and current debt rates — the key comparison is whether the new rate is lower than your current blended average rate across all debts.
It can cause a temporary dip due to a new credit inquiry and account, but responsible repayment of a consolidated loan can help credit over time by reducing credit utilization on revolving accounts.
Running up new balances on now-available credit cards, and not addressing the underlying spending habits that led to the debt in the first place.
This depends on your goals — some people consolidate only high-interest debts (like credit cards) while keeping lower-rate debts (like some student loans) separate.