About the Debt Consolidation Calculator
A debt consolidation calculator compares the cost of your existing debts against a single consolidation loan. Consolidation replaces several balances with one payment, usually at a lower rate — but the saving depends entirely on the rate and the term.
The formula
Saving = interest at old rate − interest at new rate over the termThe comparison holds the term constant. A longer consolidation term can lower the monthly payment while increasing total interest, which is the trap to watch for.
How to use this calculator
- 1Enter your Total Debt ($). The field starts at
15000, which you can overwrite. - 2Enter your Average Old APR (%). The field starts at
20, which you can overwrite. - 3Enter your New Consolidation APR (%). The field starts at
10, which you can overwrite. - 4Enter your Payoff Time (Years). The field starts at
3, which you can overwrite. - 5Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Total Debt ($) | 15000 |
| Average Old APR (%) | 20 |
| New Consolidation APR (%) | 10 |
| Payoff Time (Years) | 3 |
Result
New Monthly Payment: $484.01
Total Saved: $2644.05
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
The genuine benefit is rate reduction. Moving 15,000 dollars from an average 20 percent card rate to a 10 percent personal loan halves the interest cost, and the fixed term forces the debt to clear rather than revolving indefinitely.
The failure mode is behavioural rather than mathematical. Consolidating card balances frees up the credit lines, and a substantial proportion of borrowers rebuild those balances within two years — ending with the consolidation loan and the card debt. Consolidation only works as part of a decision to stop borrowing.
Things worth knowing
- Compare total interest, not the monthly payment. A longer term can lower payments while costing more.
- Close or freeze the cards after consolidating, or the debt tends to return.
- Origination fees of 1 to 8 percent reduce the benefit and belong in the comparison.
- Home equity consolidation offers the lowest rates but converts unsecured debt into debt secured on your house.
- Debt settlement is not consolidation. It damages credit severely and may create a tax liability on forgiven debt.
Frequently asked questions
Does debt consolidation actually save money?+
Only if the new rate is meaningfully lower and the term is not extended. Compare total interest under both scenarios rather than just the monthly payment.
Will consolidating hurt my credit score?+
A small temporary dip from the hard inquiry and new account, usually followed by improvement as utilisation falls and payments are made on time.
Should I use home equity to consolidate?+
It offers the lowest rate but secures previously unsecured debt against your home, meaning default could cost you the house. Weigh that carefully against the interest saved.
What is the difference between consolidation and settlement?+
Consolidation refinances what you owe at a better rate and you repay in full. Settlement negotiates to pay less than owed, severely damaging credit and potentially creating taxable forgiven income.