Debt consolidation calculator guide
Debt consolidation replaces or reorganizes multiple obligations into one payment; it does not eliminate principal. A lower rate can reduce cost, but fees and a longer term can erase savings.
The comparison is only useful when every current balance, APR and payment is accurate and the proposed loan reflects a personalized written offer.
How to use this debt consolidation calculator
- List current debts: Enter balance, APR and actual payment.
- Enter the offer: Use personalized rate, term and fee.
- Choose fee treatment: Specify upfront or financed.
- Compare term and total cost: Do not judge by payment alone.
- Plan against new debt: Avoid rebuilding paid card balances.
Formula and variables
Current debts are projected using their entered fixed payments. The proposed fixed loan is amortized over its new term.
New principal = consolidated balances + financed origination fee- Weighted APR — Balance-weighted current rate
- A reference, not a substitute for individual payoff schedules.
- Total-cost savings — Current modeled interest minus new interest and fee
- Positive values indicate lower modeled cost.
Worked example: consolidating three debts
A borrower compares $25,000 of mixed high-rate debt with a 60-month fixed consolidation loan.
- Current balance
- $25,000
- New term
- 60 months
- Project each current debt.
- Add the consolidation fee as selected.
- Compare payment, payoff time and total cost.
Result: A lower rate saves only when fees and term do not offset it
A lower payment may merely extend repayment.
Understanding your results
Monthly change
Current entered payments minus the new scheduled payment.
Total-cost savings
Modeled current interest minus new interest and fee.
Term change
Current longest payoff versus new payoff.
Assumptions
- Current fixed payments continue.
- No new charges.
- New loan is fixed-rate.
Limitations
- Credit-score effects and approval are excluded.
- Current card minimums can change.
- Secured consolidation adds collateral risk not quantified here.
Common mistakes
- Treating consolidation as debt forgiveness.
- Comparing payment without term and fees.
- Reusing paid credit lines.
- Converting unsecured debt to home-secured debt without considering foreclosure risk.
- Using a for-profit settlement service while believing it is consolidation.
Practical use cases
Compare a personal consolidation loan
Model rate, term and origination fee.
Check whether payment relief raises total cost
Separate cash-flow benefit from lifetime savings.
Planning and decision guide
Consolidation methods are not equivalent
Personal loans, promotional balance transfers, nonprofit debt-management plans and home-secured borrowing have different fees, protections and risks.
Debt settlement is different
Settlement attempts to resolve debt for less than owed and can involve missed payments, collection activity, credit damage, fees and possible tax consequences. It is not modeled here.
Behavior determines whether balances stay gone
Create a spending and emergency plan before paying revolving accounts with a consolidation loan. Otherwise total debt can grow.
Use reputable help
If payments are unaffordable, consider a qualified nonprofit credit counselor and verify organizations before sharing money or account access.
Frequently asked questions
Does debt consolidation reduce debt?
Not by itself. It replaces or reorganizes balances.
Can a lower payment cost more?
Yes, when repayment is extended or fees are high.
Should I finance the origination fee?
It preserves upfront cash but increases principal and interest.
Is consolidation the same as settlement?
No. Settlement seeks a reduced resolution and carries different risks.
Sources and review
- What is credit counseling? — Consumer Financial Protection Bureau. Accessed 2026-07-10.
Reviewed 2026-07-10.