What this calculator shows you
- Side-by-Side Comparison
- See current vs consolidated costs clearly
- Interest Savings
- Calculate exactly how much you could save
- Monthly Payment
- Compare your monthly payment differences
- Visual Timeline
- Watch both payoff paths over time
What is Debt Consolidation?
Debt consolidation combines multiple debts into a single loan, ideally with a lower interest rate. Instead of juggling multiple payments with varying rates, you make one monthly payment. This can simplify your finances and potentially save thousands in interest.
When Does Consolidation Make Sense?
Consolidation works best when: 1) Your new rate is significantly lower than your weighted average, 2) You can pay off the loan in a reasonable timeframe, 3) You won't run up new debt on paid-off cards, 4) The total cost including fees is less than your current path.
Types of Consolidation Loans
Personal loans are the most common consolidation method, offering fixed rates and terms. Balance transfer cards offer 0% intro APR but require payoff before the promo ends. Home equity loans have low rates but put your home at risk. Choose based on your debt amount and discipline level.
Common Consolidation Mistakes
The biggest mistake is running up new debt after consolidating. Others include: extending the term so long you pay more total interest, ignoring origination fees in your calculations, and consolidating low-rate debt like student loans into higher-rate personal loans.
Questions people ask
Will debt consolidation hurt my credit score?
Initially, a hard inquiry and new account may dip your score slightly. However, consolidation often helps long-term by lowering credit utilization (if you keep cards open) and ensuring on-time payments. The impact is usually positive after a few months.
What credit score do I need to consolidate debt?
Most consolidation loans require 670+ for the best rates. Some lenders work with scores as low as 580, but rates will be higher. Check your score and shop around—credit unions often offer better rates than banks.
Should I close credit cards after consolidating?
Usually no—closing cards hurts your credit utilization ratio. Instead, cut up the cards or freeze them in ice. Keep accounts open but don't use them. The exception is cards with annual fees you can't justify keeping.
Education only, not personalized financial, tax or investment advice. Results are estimates based on the numbers you enter; real returns vary and losses happen.