How to use this calculator
The calculator compares two paths: paying your debts as you are now, or replacing them with one fixed-rate loan.
- Your current debts: for each debt, enter the balance, APR and the monthly payment you actually make. Three rows are shown; use “Add another debt” for up to 10. Leave a balance empty to skip a row.
- New loan APR: the rate on the consolidation loan you’ve been offered.
- New loan term: how long the loan lasts.
- Origination fee: the upfront fee as a percentage of the loan, often taken out of the money you receive.
The results show your monthly payment, payoff time and interest for both paths, the fee, the total saving or extra cost, and the break-even month.
Example: three debts and a 36-month loan
Say you have:
| Debt | Balance | APR | Monthly payment |
|---|---|---|---|
| Credit card 1 | $6,000 | 22.99% | $200 |
| Credit card 2 | $3,500 | 27.49% | $120 |
| Personal loan | $8,000 | 11.5% | $250 |
At these payments, you’d be debt-free in 4 years 1 month and pay $6,956.53 in interest, paying $570 a month in total.
Now compare a consolidation loan at 9.99% over 36 months with a 5% origination fee. To clear $17,500, you borrow $18,421.05, so the fee is $921.05. Your new payment is $594.31 a month and total interest is $2,974.07.
Consolidating saves $3,061.41 in interest and fees, and you’re debt-free a year sooner. The interest you avoid covers the fee by month 8.
Two changes show how sensitive this is:
- 60-month term: the payment drops to $391.30, but the saving shrinks to $978.40.
- 15.99% APR: the saving falls to $1,145.14, and the fee takes until month 24 to pay for itself.
How it’s calculated
Current debts. Each debt is paid at its own monthly payment until it’s gone. Each month, interest is the balance × APR ÷ 12, and the rest of the payment reduces the balance. Payments aren’t moved to another debt when one is paid off. If a payment doesn’t cover a debt’s monthly interest, that debt never gets paid off, and the calculator tells you.
Loan amount = total balances ÷ (1 − fee %)
New monthly payment = loan × r ÷ (1 − (1 + r)^−n), where r is the monthly rate (APR ÷ 12 ÷ 100) and n is the number of months.
Savings = current interest − (new loan interest + fee)
Break-even is the first month when cumulative interest on your current debts, minus cumulative interest on the new loan, is at least the fee.
All figures are calculated at full precision and rounded for display.
Tips for consolidating debt
- Compare the APR, not just the payment. A lower payment from a longer term can hide a higher total cost.
- Ask whether the fee comes out of the loan. If it does, borrow enough to clear every balance in full.
- Pick the shortest term you can afford. As the example shows, the term matters as much as the rate.
- Check for prepayment penalties. If you plan to pay the loan off early, make sure you won’t be charged for it.
- Have a plan for the cleared cards. Consolidation only saves money if the old balances stay at zero.
Frequently asked questions
Is debt consolidation a good idea?
It can be when the new loan's rate is clearly lower than the average rate on your debts and the fee doesn't wipe out the savings. Enter your real numbers above. If the result shows an extra cost or a late break-even month, keeping your current debts may be cheaper.
Why is the loan amount bigger than my total debts?
Most personal loans take the origination fee out of the money you receive. To end up with enough to clear every balance, you need to borrow a little more. With a 5% fee, clearing $17,500 of debt means borrowing $18,421.05.
What does break-even mean?
It's the first month when the interest you've avoided by consolidating adds up to more than the fee you paid. After that month, every month is a saving. If break-even never comes, the new loan costs more overall.
Will a longer loan term save me more?
Usually not. A longer term lowers your monthly payment but adds interest. In our example, a 60-month loan cuts the payment to $391.30 but saves only $978.40, against $3,061.41 for a 36-month loan.
Should I close my credit cards after consolidating?
That's a personal decision, but the main risk with consolidation is running the cards back up. Whatever you decide, avoid adding new balances while you repay the loan.
Does this include balance transfer cards?
No. This calculator compares a fixed-rate installment loan. Balance transfer cards have introductory rates that end after a set time, which works differently.