Debt Consolidation Calculator
Compare paying off several debts as you do now with a single fixed-rate consolidation loan, by payoff time and total interest.
Current Debts
Consolidation Terms
The current-debt figures assume you keep paying the same amount each month until each balance is cleared. Origination fees and balance-transfer fees are not included.
Updated Formula covered by automated tests
Debt consolidation means taking one new loan, often a personal loan or a home equity loan, and using it to pay off several existing balances such as credit cards. This calculator lists your current debts, works out how long they would take to clear and how much interest they would cost if you keep paying what you pay now, and compares that with a single fixed-rate loan at the rate and term you enter.
The comparison matters because a consolidation offer is usually advertised by its monthly payment. A lower payment can come from a lower rate, which saves money, or simply from a longer term, which can cost more in total. Seeing both the monthly figure and the lifetime interest side by side shows which of the two you are actually being offered.
The formula
- balanceᵢ, APRᵢ
- Outstanding balance and annual percentage rate of each existing debt
- B
- Total amount consolidated: the sum of the balances you include
- r
- Monthly rate of the new loan: its APR ÷ 12 ÷ 100
- n
- Number of monthly payments on the new loan: term in years × 12
- M
- Fixed monthly payment that clears the new loan in exactly n months
The new loan is a standard fully amortizing installment loan, so its payment comes from the annuity formula: the present value of n equal payments discounted at r must equal the amount borrowed. Total interest is simply M × n − B.
For the debts you already have, the calculator steps forward one month at a time, adding a month of interest to each balance and subtracting the payment you entered, until the balance reaches zero. If a payment is smaller than the interest that accrues in a month, the balance would never fall, and the tool says so instead of showing a number.
Worked example
Luis owes $5,000 on a card at 22% APR, paying $150 a month, and $3,000 on a card at 18% APR, paying $90 a month. A lender offers an $8,000 personal loan at 8% APR over 5 years.
- 1 Weighted current rate: (5,000 × 22 + 3,000 × 18) ÷ 8,000 = 164,000 ÷ 8,000 = 20.5%.
- 2 Keeping the same payments, the first card is cleared in 52 months with $2,798.05 of interest and the second in 47 months with $1,190.16, so $3,988.21 in total.
- 3 New loan payment: r = 0.08 ÷ 12 = 0.006667 and n = 60, giving M = $162.21 a month.
- 4 New loan interest: 162.21 × 60 − 8,000 = $1,732.67.
- 5 Difference: $3,988.21 − $1,732.67 = $2,255.54 less interest, with a payment $77.79 lower than the current $240.
Result: Consolidating would cut Luis’s monthly outlay from $240 to $162.21 and save about $2,256 in interest, before any origination fee, although the last payment comes 8 months later than his current plan.
Before you rely on the result
- The current-debt projection holds each payment fixed. Real credit card minimums usually shrink as the balance falls, which stretches the payoff and raises the interest beyond what is shown.
- Fees, promotional rates, variable-rate changes and new charges on the old accounts are not modeled.
- For a plan that fits your full budget, a reputable nonprofit credit counselor can review your options at little or no cost.
Frequently asked questions
What if I keep paying my old total on the consolidation loan?
You finish much sooner and pay less interest. In the example, paying $240 a month instead of the required $162.21 on the 8% loan clears it in about 38 months instead of 60. Check first that the lender does not charge a prepayment penalty.
How do origination fees change the comparison?
Many personal loans deduct a fee of a few percent from the amount you receive, so you must borrow more to clear the same balances. Add the fee to the balance you consolidate, or compare loans by APR, which by law includes most finance charges, rather than by the interest rate alone.
Is a 0% balance transfer card better than a consolidation loan?
It can be, if you can repay the whole balance before the promotional period ends. Transfers usually carry a fee of 3% to 5% of the amount moved, and any balance left afterward reverts to the card’s regular APR, which is often higher than a personal loan rate.
Will consolidating hurt my credit score?
Applying usually triggers a hard inquiry, which can lower a score slightly for a while. Paying cards down to zero lowers your credit utilization, which often helps. The larger risk is running the cards up again after they are cleared, which leaves you with the loan and new card debt.
Sources
- FTC: How To Get Out of Debt (consumer.ftc.gov)