Debt Consolidation Calculator
Combine high-interest balances into one loan and compare the new payment, interest saved, and payoff time.
What it does
A consolidation loan replaces several balances with one fixed payment. The appeal is easy to see: one due date, one rate, and a payment that may be lower than the sum of the minimums. Whether it saves money depends on the new rate, the new term, and the fees added to the loan.
This tool compares two paths. The first keeps the current balance, rate, and payment until the debt reaches zero. The second moves the balance and any fees into a new loan at the stated rate and term. The results show the new payment, the interest on each path, and how many months sooner or later the new loan ends.
The old payoff uses the standard amortization formula. A payment that only covers the monthly interest never reduces principal, so the tool stops with a clear message instead of returning an infinite payoff. The new payment also uses amortization, which means the last payment is the same size as the others and the balance lands at zero.
Fees matter. A $500 origination fee added to a 9% loan raises both the payment and the interest. So does a longer term. A 60-month loan at 9% can cost less per month than a 36-month loan at 9% while costing more in total, and the tool shows both totals side by side.
Consolidation does not erase debt or repair credit by itself. It can help when the new rate is clearly lower and the payment fits the budget. It can hurt when the term is so long that interest builds back up, or when the old cards stay open and get used again.
How to use
- Add the balances you will actually move to the new loan.
- Enter a balance-weighted average APR for those accounts.
- Type the current total monthly payment, not one minimum payment.
- Enter the new loan APR and term from the offer, then add any fees paid from the loan.
- Read the new payment first, then compare interest saved and months sooner.
- Try a shorter term and a longer term to see how the tradeoff changes.
Formula
- B
- Total balance moved to the new loan, in dollars.
- r1
- Current monthly rate, current APR divided by 1200.
- P
- Current monthly payment, in dollars.
- r2
- New monthly rate, new APR divided by 1200.
- N
- New loan term in months.
- F
- Fees added to the new loan, in dollars.
The old payoff is rounded up to the next full month so the comparison uses whole payments. If the current payment is less than r1 x B, the balance grows and the tool returns an error. A zero percent new loan is allowed and produces a payment of (B + F) / N with zero interest.
Worked example
Example: $18,000 at 22.9% moved to 11.5% for 48 months
Balance $18,000, current APR 22.9%, current payment $500, new APR 11.5%, new term 48 months, no fees.
- Current monthly rate: 22.9 / 1200 = 0.019083. First month interest: 18,000 x 0.019083 = $343.50.
- Old payoff: -ln(1 - 0.019083 x 18,000 / 500) / ln(1.019083) = 61.4 months, rounded up to 62.
- Old interest: 500 x 62 - 18,000 = $13,000.00.
- New monthly rate: 11.5 / 1200 = 0.009583. New payment: 18,000 x 0.009583 / (1 - 1.009583^-48) = $469.60.
- New interest: 469.60 x 48 - 18,000 = $4,540.90.
- Interest saved: 13,000.00 - 4,540.90 = $8,459.10. The new loan ends 14 months sooner.
Reference table
| Balance and old terms | New terms | New payment | Interest saved |
|---|---|---|---|
| $12,000 at 24%, $400 payment | 12% for 36 months | $398.57 | $4,451.42 |
| $18,000 at 22.9%, $500 payment | 11.5% for 48 months | $469.60 | $8,459.10 |
| $30,000 at 18%, $700 payment | 9% for 60 months, $500 fee | $633.13 | $11,512.21 |
Limits
- Assumes fixed rates and a payment that stays the same on the old balance.
- Only counts fees entered in the fee field; closing costs paid outside the loan are excluded.
- Does not model variable rates, teaser rates, or a payment that changes over time.
- Does not include taxes, credit score effects, or the cost of reusing the old cards.
Common mistakes
- Comparing the new payment with the old payment and ignoring the extra months.
- Leaving the old cards open and running new balances on them.
- Using the advertised rate before checking the actual APR and fees.
- Choosing a 72-month term for a small rate drop, which can raise total interest.
- Forgetting that a payment at or below the monthly interest never pays the balance down.
Try it yourself
Quick checks. Answers sit tucked under each question.
$12,000 at 24% with a $400 payment, moved to 12% for 36 months?
New payment $398.57, interest saved $4,451.42, 11 months sooner. Old interest $6,800.00, new interest $2,348.58.
$30,000 at 18% with a $700 payment, moved to 9% for 60 months plus a $500 fee?
New payment $633.13, interest saved $11,512.21, 10 months sooner. Old interest $19,000.00, new interest $7,487.79.
$10,000 at 30% with a $250 payment?
The monthly interest is $250.00, so the payment covers interest only and the balance never falls. The tool returns an error.
Questions
What is a debt consolidation loan?
A new loan used to pay off several balances. You then repay one lender on one schedule, usually at a fixed rate.
Does consolidation lower my interest?
Only if the new APR is lower after fees and the term is not stretched so far that total interest rises. The tool shows the dollar result.
Will consolidation hurt my credit?
A new inquiry and a new account can lower a score for a while. On-time payments and lower card balances can help over time. The net effect depends on your file.
Should I choose the longest term?
A longer term lowers the payment but usually raises total interest. Pick the shortest term whose payment fits your budget.
What fees should I include?
Any origination, closing, or documentation fee paid from the loan proceeds. Fees paid separately belong in your budget, not the loan balance.
When is consolidation a bad idea?
When the rate is not lower, the term is very long, the payment is still unaffordable, or you plan to use the freed-up cards again.
Sources
- Consumer Financial Protection Bureau: Consolidating credit card debt
- Consumer Financial Protection Bureau: How lenders calculate monthly payments
- Consumer Financial Protection Bureau: Credit counseling, debt settlement, and consolidation