How this calculator works
Each debt is paid down separately at its APR and payment to find total interest and the last payoff date. The consolidation loan is sized to cover all balances plus the origination fee and paid over its term. Savings are interest paid separately minus loan interest and fee.
Worked example
With the example values below: Savings from consolidating, $2,799 (one payment of $428.02 instead of $450.00). Change any number above to run your own.
What you enter
| Input | Example |
|---|---|
| Debt 1 | |
| Balance | $6,000 |
| APR | 24% |
| Monthly payment | $200 |
| Debt 2 | |
| Balance | $4,000 |
| APR | 19% |
| Monthly payment | $150 |
| Debt 3 | |
| Balance | $2,500 |
| APR | 27% |
| Monthly payment | $100 |
| Consolidation loan | |
| Loan APR | 12% |
| Term | 36 months |
| Origination fee | 3% |
How debt consolidation works
Debt consolidation combines several debts, usually credit cards, into one new loan with a single payment. If the new loan's rate is lower than the average rate on your current debts, more of each payment goes to principal and you pay off the balance sooner.
The most common tools are a personal loan, a 0% balance transfer card, a home equity loan or HELOC, or a nonprofit debt management plan that negotiates lower card rates.
When it saves money
The calculator pays each debt off separately at its own rate and payment, then compares the total interest and payoff date with a single consolidation loan, including its fee. If the result shows little or no saving, a focused payoff plan may work as well; the credit card payoff calculator can build one.
- The new loan's APR, including any origination fee, is lower than the weighted rate on your debts.
- You'll stop adding new charges to the cards you pay off.
- The new term isn't so long that lower monthly interest is offset by more months of interest.
The biggest risk
Consolidation frees up credit card limits. If spending continues, you can end up with the new loan and new card balances, in a worse position than before. Many people keep their old cards open for their credit history but remove them from wallets and online stores.
Using home equity to consolidate turns unsecured debt into debt secured by your house, which puts the home at risk if you can't pay.
Effect on your credit
Applying adds a hard inquiry, but paying cards to zero sharply lowers your credit utilization, which often raises your score within a month or two. On-time payments on the new loan build your history. Closing the old cards can hurt by shrinking your available credit, so think carefully before closing them.
Frequently asked questions
Is debt consolidation a good idea?
It's a good idea when the new loan's APR, including fees, is lower than your current rates and you won't run the cards back up. It's not a good idea if it only lowers your payment by stretching the term, or if spending habits haven't changed.
Does debt consolidation hurt your credit?
There's a small dip from the hard inquiry and new account, but paying off cards lowers utilization, which usually improves your score within a few months if you keep balances low.
What credit score do I need for a debt consolidation loan?
Many lenders accept scores around 600 to 640, but the best rates usually require 690 or higher. With lower scores, the rate may not be low enough to save money.
What's the difference between debt consolidation and debt settlement?
Consolidation replaces your debts with a new loan and repays them in full. Settlement negotiates to pay less than you owe, usually after missed payments, which seriously damages your credit and can create taxable forgiven debt.
Can I consolidate debt with bad credit?
Possibly, but rates may be too high to help. A nonprofit credit counseling agency's debt management plan can lower card rates without a new loan and is worth considering.
Grow what this calculator projects.
TruthSayer AI sends quantitative stock signals across valuations, earnings and dark-pool activity, each one traded in its own funded account first.
Estimates for planning only, not financial, tax or legal advice. Tax tools use 2026 federal figures (brackets, $16,100 / $32,200 standard deduction, $19,000 gift exclusion, $15M lifetime exemption). Rates shown as defaults are examples; replace them with quotes you actually receive.