Debt Consolidation Calculator

Calculate your debt consolidation options and potential savings. Our calculator helps you understand the benefits of consolidating multiple debts into a single payment.

Current Debts

$
%
$
$
%
$

Consolidation Options

%
months

Consolidation Summary

Total Debt

$8,000

Combined balance

Monthly Payment

$265.14

Fixed payment amount

Interest Savings

$1,522.32

Estimated savings vs. current rates

Time Saved

18 months

Pay off debt faster

Debt Payoff Progress

Chart shows remaining balance over time based on your consolidation terms

Consolidation Details

Current TotalNew RateTermTotal Cost
$8,00012.00%36 months$9,545.04

Understanding Debt Consolidation

What is Debt Consolidation?

Debt consolidation combines multiple debts into a single loan with:

  • One monthly payment instead of multiple payments
  • Potentially lower interest rates
  • Simplified debt management
  • Fixed repayment schedule

Real-World Example

Consolidating $20,000 in credit card debt:

  • Original: 3 cards at 18-24% APR
  • Consolidated: One loan at 12% APR
  • Monthly savings: $150-200
  • Total interest savings: $3,000-5,000

Consolidation Strategies

There are several effective ways to consolidate your debt, each with different benefits and considerations:

Personal Loans

  • Fixed interest rates for predictable payments
  • No collateral required in most cases
  • Fast funding options available
  • Best for: Those with good credit seeking simplicity

Balance Transfers

  • 0% introductory APR for 12-18 months
  • No interest savings during promo period
  • Transfer fees typically 3-5% of balance
  • Best for: Those who can pay off debt during promo period

Home Equity Options

  • Lowest interest rates available
  • Potential tax benefits on interest
  • Longer repayment terms available
  • Caution: Puts your home at risk if payments missed

5 Actionable Steps for Successful Debt Consolidation

1

Check Your Credit Score First

Your credit score will determine what consolidation options are available to you and what interest rates you qualify for. Request a free credit report and address any errors before applying for consolidation.

Tip: Aim for a score of 670+ for better consolidation rates. Each 50-point increase can save thousands in interest.

2

Calculate Your Total Debt Load

Make a comprehensive list of all your debts, including balances, interest rates, minimum payments, and due dates. This gives you a clear picture of your current situation and helps identify which debts to prioritize.

Action: Use the calculator above to input all your debts and see potential savings from consolidation.

3

Compare All Available Options

Research and compare different consolidation methods: personal loans, balance transfers, home equity options, and debt management plans. Look beyond the interest rate to consider fees, terms, and restrictions.

Strategy: Get quotes from at least three different lenders and compare the APR (annual percentage rate), not just the interest rate.

4

Create a Budget for the New Payment

Before committing to consolidation, make sure the new payment fits within your monthly budget. Even if the payment is lower, you need a plan to consistently make payments on time each month.

Example: If your consolidated payment is $500 monthly, review your budget to ensure you can comfortably cover this while meeting other obligations.

5

Address the Root Cause of Debt

Consolidation treats the symptom, not the cause. Create a plan to change spending habits, build emergency savings, and avoid taking on new debt while paying off your consolidation loan.

Critical: Consider closing credit card accounts after transferring balances to reduce temptation, or at minimum, store cards securely away from daily use.

Common Consolidation Mistakes to Avoid

Pitfalls to Avoid

  • Consolidating without comparing options - Always research multiple lenders and products
  • Ignoring fees and fine print - Origination fees, balance transfer fees, and prepayment penalties can add significant costs
  • Using freed-up credit cards to accumulate more debt - This leads to an even worse debt situation
  • Choosing the wrong consolidation method for your situation - Not all debt types benefit from consolidation
  • Failing to address spending habits that created the debt initially

Success Strategies

  • Calculate the total cost of consolidation, including all fees and interest over the loan term
  • Set up automatic payments to ensure you never miss a payment on your new loan
  • Create a budget that includes your new consolidation payment and prevents new debt
  • Build an emergency fund to avoid relying on credit cards for unexpected expenses
  • Track your progress to stay motivated - celebrate paid-off debt milestones

Related Calculators

Loan Calculator

Calculate monthly payments and total costs for your loans.

Credit Card Payoff Calculator

Plan your credit card debt repayment and estimate payoff time.

Home Equity Calculator

Find out how much equity you have and your potential borrowing power.

Budget Calculator

Create a budget to manage your finances and debt repayment effectively.

Refinance Calculator

Determine if refinancing your existing loans makes financial sense.

Student Loan Calculator

Plan your student loan repayment strategy and estimate monthly payments.