Debt Consolidation Calculator Free Tool
Debt Consolidation Calculator
Current Debts
Consolidation Loan
Upfront fee as percentage of loan amount (e.g., origination fee, points)
Debt consolidation combines multiple debts into a single loan, ideally at a lower interest rate. Done right, it reduces total interest paid and simplifies your finances into one monthly payment. Done wrong, it extends the repayment timeline and costs more overall. This calculator shows whether consolidation makes financial sense for your specific situation.
When Consolidation Helps
Consolidation works best when you can qualify for a meaningfully lower rate than your current debts, you commit to not accumulating new debt on the paid-off accounts, and the new loan term is similar to your current payoff timeline rather than much longer.
Monthly Savings = (Old Combined Payments) - (New Consolidated Payment) Total Interest Savings = Old Total Interest - New Total Interest Breakeven (if fees apply) = Upfront Fees / Monthly Savings
Consolidation Options
Several products are used for debt consolidation, each with trade-offs in terms of rate, requirements, risk, and flexibility.
| Method | Rate Range | Key Consideration |
|---|---|---|
| Personal loan | 6-35% APR | No collateral, rate depends on credit |
| Balance transfer card | 0% promo, then 18-25% | Transfer fee; must pay in promo period |
| Home equity loan/HELOC | 6-10% | Lower rate, but home is collateral |
| Retirement account loan | Prime +1-2% | Loses investment growth; risks if you leave job |
| Debt management plan (DMP) | Negotiated lower rates | Credit counseling agency; takes 3-5 years |
Frequently Asked Questions
Does debt consolidation hurt my credit score?⌄
A new loan involves a hard inquiry (small temporary dip). Opening a new account lowers average account age. However, paying off revolving accounts reduces utilization, which is a large positive factor. Net effect on most people's scores over 6-12 months is neutral to positive, especially if card balances go to zero and stay there.
What is the difference between debt consolidation and debt settlement?⌄
Consolidation moves your full debt to a new loan at (hopefully) better terms. You still owe everything you borrowed. Debt settlement negotiates with creditors to accept less than what you owe. Settlement severely damages credit scores, may result in taxable income on forgiven amounts, and should only be considered as an alternative to bankruptcy.
What is a debt management plan (DMP)?⌄
A DMP is a structured repayment plan arranged by a non-profit credit counseling agency. They negotiate lower interest rates with your creditors and you make one monthly payment to the agency, which distributes it. DMPs typically run 3-5 years. They are not the same as settlement and do not involve reducing the principal owed.
The warning about consolidation and new debt⌄
The most common consolidation failure: paying off all the credit cards, then gradually running them back up to previous balances while also repaying the consolidation loan. This leaves people in twice as much debt. Consolidation is only beneficial if you close or lock away the paid-off accounts and change the spending habits that created the debt.