Quick answer
A debt consolidation calculator tests whether one new loan beats your current debts. Rolling $16,400 of card balances at 23.5% APR — costing $9,378 of interest at $520 a month — into a consolidation loan at 11.9% over 48 months cuts the payment to $448.31 and total interest plus fees to $5,119: a saving of about $4,259, provided the cards stay at zero afterwards.
How the Debt Consolidation Calculator works, step by step
Enter your current debts (or their balance-weighted average APR) and what you currently pay monthly, then the consolidation loan's amount, APR, term and any origination fee. The calculator prices both paths to zero and compares total interest and payoff dates on equal terms, with a chart of the two balances falling.
Compare at the same payoff horizon as well as at the quoted one. A consolidation loan can show a lower payment purely by stretching the term — 48 months against debts you were clearing in 50 — which is not a saving, just a slower schedule. The honest check is total interest at a similar end date, and the tool warns you when the new term stretches beyond your current payoff.
Add the fee, and notice how the tool treats it: the origination fee is rolled into the new loan, so you borrow the fee and pay interest on it too. On $16,400, a 4% fee is $656, so the new loan is $17,056 and the fee itself accrues interest for 48 months. The calculator's verdict — saving or cost — already includes the fee in the new path's total.
The best version of the deal is rarely the quoted payment. Pay the new loan at your old $520 a month instead of its $448.31 payment and it clears in 40 months with about $3,677 of interest — total cost $4,333 including the fee, saving $5,045 against the current path instead of $4,259. The lower payment is a safety net, not a target.
The verdict flips if the rate gap is small or the term stretches far. A consolidation loan at 18% over 60 months against 23.5% card debt can still cost more in total interest than staying put, because five years of interest at 18% exceeds four years at 23.5% on a shrinking balance. Run the numbers before signing — the calculator's red warning exists for exactly this case.
The formula
Current path: simulate the balance at its average APR with your current total payment until it reaches zero. New path: new principal = balance + origination fee; payment = principal × [r(1 + r)^n] ÷ [(1 + r)^n − 1]; total cost = interest + fee. Saving = current total interest − new total cost.
Worked example — try it on the calculator above
Worked example: $16,400 of cards into one loan
Current: $16,400 at a blended 23.5% APR, paying $520 a month — debt-free in 50 months, interest $9,378. Consolidation: a 4% fee ($656) is rolled in, so the loan is $17,056 at 11.9% APR over 48 months — payment $448.31, total interest $4,463, total cost including the fee $5,119. Headline saving: $4,259, plus a payment $72 a month lower. Pay the loan at the old $520 a month instead and it clears in 40 months with about $3,677 of interest — the best version of the deal, saving $5,045.
Frequently Asked Questions
What rate do I need for consolidation to be worth it?
The new APR must be meaningfully below your blended card APR — as a working rule, at least 5 points lower after fees — and the term must not stretch so far that interest accumulates back. The calculator settles it exactly for your numbers. At card APRs around 23%, borrowers with fair-to-good credit commonly qualify for 10% to 16%, which usually passes the test comfortably.
Why do people end up worse off after consolidating?
The freed credit cards get used again. The loan is then added to new card balances instead of replacing them — total debt rises and the household is worse off than before consolidating. The behavioural fix is part of the product: close or freeze the cards, or at minimum remove them from wallets and saved payment details, before the loan funds.
Consolidation loan or balance transfer card?
For balances you can clear inside 12 to 21 months, a 0% balance transfer is usually cheaper — the interest cost is just the transfer fee. For larger balances needing 3 to 5 years, the fixed loan wins because the transfer's rate reverts to a standard card APR on whatever remains. Run both in the calculator with your realistic monthly payment.
Does consolidation hurt my credit score?
Briefly, through the application inquiry and the new account. Then usually the opposite: paying cards to zero with an installment loan slashes revolving utilisation, which often raises the score within a cycle or two. The lasting effect depends on the cards staying paid off — maxing them again damages both the score and the finances the loan was meant to repair.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.