How to use this calculator
- Enter each debt you plan to consolidate with its balance, APR and the monthly amount you currently pay.
- Enter the loan offer: interest rate, term and origination fee. Prequalified offers from lenders give you the most realistic numbers.
- Choose how the fee is charged. Most personal loans deduct it from the proceeds, so you must borrow more to pay off the same debts.
- Compare. The results show your new payment, the true APR including the fee, and the difference in total cost and payoff time.
How debt consolidation works
Debt consolidation replaces several debts with one new loan — usually a fixed-rate personal loan — that you use to pay the old balances off. You end up with one payment, one due date, a fixed rate and a set payoff date. It helps most when the new rate is meaningfully lower than the rates on your current debts, which is common for credit cards charging 20%–30% APR. The CFPB’s guide to consolidating credit card debt covers the risks to check first.
Consolidation doesn’t reduce the amount you owe; it changes the price and the schedule. The savings come from a lower rate, and they can be wiped out by fees or by stretching the loan over many more years.
Origination fees and true APR
Many personal loans charge an origination fee of about 1% to 10%, taken out of the loan before you receive the money. That makes the loan more expensive than its interest rate suggests. The APR disclosed under the Truth in Lending Act’s APR rules includes this fee; this calculator computes it the same way — as the rate at which your payments equal the cash you actually receive.
Worked example
Alex has three credit cards totalling $15,000 at an average of about 24.4% APR, paying $470 a month. At those payments, the cards take 4 years 10 months to clear and cost $9,607 in interest.
A lender offers a 48-month loan at 12.5% with a 5% origination fee deducted from the proceeds. To net $15,000, Alex borrows $15,789 (a $789 fee). The payment is $419.68 a month — $50 less than today — and the total interest is $4,355.
Including the fee, the loan costs $5,145, saving about $4,462, and Alex is debt-free 10 months sooner. The fee raises the true APR from 12.5% to about 15.3%.
Two more numbers the calculator shows: with this fee and term, any loan rate below 23.76% still saves Alex money, and if Alex keeps paying $470 a month instead of the $419.68 required, the loan is gone in 42 months and the saving grows to $5,072. Most personal loans have no prepayment penalty, but check yours.
Debt consolidation loan payments by amount
Monthly payment and total interest on a fixed-rate consolidation loan, before any origination fee. The Federal Reserve’s average for a 24-month bank personal loan was 11.86% in May 2026; borrowers with fair credit often pay 18% or more.
| Amount | 3 years at 12% | 5 years at 12% | 3 years at 18% | 5 years at 18% |
|---|---|---|---|---|
| $10,000 | $332/mo $1,957 interest | $222/mo $3,347 interest | $362/mo $3,015 interest | $254/mo $5,236 interest |
| $15,000 | $498/mo $2,936 interest | $334/mo $5,020 interest | $542/mo $4,522 interest | $381/mo $7,854 interest |
| $20,000 | $664/mo $3,914 interest | $445/mo $6,693 interest | $723/mo $6,030 interest | $508/mo $10,472 interest |
| $30,000 | $996/mo $5,871 interest | $667/mo $10,040 interest | $1,085/mo $9,045 interest | $762/mo $15,708 interest |
| $50,000 | $1,661/mo $9,786 interest | $1,112/mo $16,733 interest | $1,808/mo $15,074 interest | $1,270/mo $26,180 interest |
A longer term lowers the payment but raises the interest: on $20,000 at 12%, five years instead of three adds $2,779 of interest.
When debt consolidation doesn’t save money
- The rate isn’t low enough once the fee is counted. Alex’s cards average about 24.4%, but with a 5% fee the loan only saves money below 23.76% over 4 years, or below 19.06% over 5 years. The calculator shows this break-even rate for your own debts.
- The term is much longer than your current payoff time. Over 7 years at 12.5%, Alex’s payment drops to $282.97, but the saving shrinks to $838. At 18% over 7 years, the payment is still lower than today ($331.86), yet the loan costs $3,269 more than keeping the cards.
- Some debts are already cheap. Leave out 0% promotional balances, car loans and low-rate student loans; adding them raises the amount you borrow without lowering your rate.
- The cards get used again. If the paid-off cards fill back up, you end up with the loan and new card debt.
What rate can you get?
Lenders price consolidation loans mainly on your credit score, income and debt-to-income ratio. As a reference point, the Federal Reserve’s G.19 survey put the average 24-month personal loan at commercial banks at 11.86% in May 2026, while credit card accounts that charged interest averaged 22.15%. Online lenders typically quote from about 7% for excellent credit to the mid-30s for poor credit, and many charge an origination fee on top.
- Prequalify with several lenders. It uses a soft credit check and shows real rates and fees.
- Compare APRs, not rates. The APR includes the origination fee, so it’s the fair way to compare offers.
- Check your debt-to-income ratio with the DTI calculator; many lenders look for 36% to 50% or less.
Consolidation options compared
| Option | Typical cost | Best for | Watch out for |
|---|---|---|---|
| Personal loan | Fixed APR; fee 0%–10% | Fixed payoff date, no collateral | Origination fees; higher rates with fair credit |
| 0% balance transfer card | 3%–5% fee | Balances you can clear in 12–21 months | Regular APR after the promo — see the balance transfer calculator |
| HELOC or home equity loan | Lower rates; closing costs possible | Homeowners with equity and stable income | Your home secures the debt |
| Debt management plan | Small monthly fee | Reducing card APRs through a nonprofit counselor | Cards are usually closed |
| 401(k) loan | Interest paid to yourself | Last resort | Lost growth; due quickly if you leave your job |
For the two most common choices side by side, read balance transfer vs personal loan.
Pitfalls to avoid
- Running the cards back up. The biggest risk: consolidating, then spending on the freshly cleared cards. Consider lowering limits or removing saved card details.
- Focusing only on the payment. An 84-month loan can cut your payment and still cost more in total.
- Ignoring prepayment terms. Most personal loans have no prepayment penalty — confirm it so you can pay early.
- Debt settlement confusion. Debt settlement companies, which the FTC warns about, negotiate to pay less than you owe, often damaging your credit and charging large fees. That is not the same as consolidation.
Frequently asked questions
Does debt consolidation save money?
What is an origination fee?
Will a consolidation loan hurt my credit score?
Is a lower monthly payment always better?
Can I use a HELOC or home equity loan to consolidate debt?
What credit score do I need for a debt consolidation loan?
Should I close my credit cards after consolidating?
Sources
- G.19 Consumer Credit: interest rates on personal loans and credit cards — Federal Reserve
- What do I need to know about consolidating my credit card debt? — Consumer Financial Protection Bureau
- How to get out of debt — Federal Trade Commission
- Regulation Z §1026.22 — determination of annual percentage rate — Consumer Financial Protection Bureau