How to use the debt consolidation calculator
The calculator starts with three card balances totaling $14,500.00 and a personal loan offer of 11.99% over 48 months with a 5% origination fee. Replace them with your own figures.
- List the debts you would pay off, with each balance, APR and the monthly payment you actually make today. Use your real payment, not the minimum, if you pay more. Add or remove rows as needed.
- Enter the new loan’s interest rate and term from the offer. Use the rate you are approved for. The advertised starting rate is for the best credit profiles.
- Enter the origination fee and choose how it is charged. Most personal loan lenders deduct it from the money they send, so you must borrow more to clear the same debts. Others add it to the balance.
The results compare the total you would pay on each path. The chart shows the amount owed over time on your current debts and on the new loan. The tables show each current debt’s payoff time and the new loan at other terms.
How the comparison works
Each current debt keeps its own payment until it is paid off. The new loan is a standard fixed-rate installment loan:
Loan amount = Debts ÷ (1 − Fee), if the fee is deducted, or Debts × (1 + Fee), if it is added
New payment = L × i(1 + i)n ÷ [(1 + i)n − 1]
Saving = Total paid on current debts − New payment × nL is the loan amount, i the new rate divided by 12 and n the term in months. Because the new loan's total includes repaying the fee, the saving is net of the fee.
The break-even rate is the new-loan rate at which the two paths cost exactly the same, for your term and fee. Any offer below it saves money, and any offer above it costs more. The weighted APR is the balance-weighted average rate of your current debts.
A worked example
Your three cards total $14,500.00 at a weighted APR of 24.47%. You pay $435.00 a month between them. At that pace they are cleared in 60 months and cost $10,159.76 in interest.
The 5% fee is deducted from the proceeds, so you must borrow $15,263.16 to receive enough to pay everything off. The fee is $763.16.
At 11.99% over 48 months, the new payment is $401.86. Total interest is $4,026.24, and with the fee the loan costs $4,789.40.
You pay $24,659.76 on the current path and $19,289.40 on the new loan, a saving of $5,370.36. Consolidating stays worthwhile at any rate below 25.90% for this term and fee.
If you kept paying the old $435.00 into the new loan, it would be gone in 3 years 8 months and save $5,771.63.
A lower payment is not the same as a saving
Consolidation offers are usually sold on the monthly payment, and a longer term is the easiest way to lower it. But a longer term also means more months of interest. With the example debts and the same 5% fee:
| New loan | Monthly payment | Total interest and fee | Result |
|---|---|---|---|
| 11.99%, 36 months | $506.88 | $3,747.76 | Saves $6,412.00 |
| 11.99%, 48 months | $401.86 | $4,789.40 | Saves $5,370.36 |
| 11.99%, 84 months | $269.35 | $8,125.81 | Saves $2,033.95 |
| 17.99%, 48 months | $448.28 | $7,017.22 | Saves $3,142.54 |
| 17.99%, 72 months | $348.03 | $10,558.35 | Costs $398.59 more |
The 72-month loan at 17.99% has a lower payment than the current $435.00, yet it costs more in total. Stretching card balances averaging about 24% into a six-year loan at 18% can leave you paying longer and paying more. The break-even rate falls as the term grows: 25.90% at 48 months, but only 14.89% at 84 months.
The fee matters too. Without it, the example loan would save $6,334.83 instead of $5,370.36. If the lender adds the fee to the balance rather than deducting it, the saving is $5,418.58.
Balance transfer cards
A balance transfer card is the other common way to consolidate card debt. These cards typically offer 0% or a very low rate for a promotional period, often 12 to 21 months, and charge a one-time transfer fee, usually 3% to 5% of the amount moved.
They can beat a loan by a wide margin if you clear the balance before the promotion ends. Interest-free months pay down principal far faster. The risks are on the other side of the deadline. Whatever is left moves to the card’s regular APR, which is often as high as the cards you left. Credit limits may not cover your whole balance, and a late payment can end the promotion early. A rough test: divide the transferred balance plus the fee by the number of promotional months. If you can pay that each month, the transfer is likely the cheaper route. If not, a fixed-rate loan with a firm end date may suit you better.
What this calculator does not include
- Your current payments are held fixed. If you pay only card minimums that shrink as balances fall, the current path takes longer and costs more than shown. Enter the amount you really pay.
- Daily interest. Interest is charged monthly at APR ÷ 12, a close approximation to card statements.
- Credit and behavior. Approval, the rate offered and any effect on your credit score are outside the calculation. So is the risk of running the cards up again after they are cleared.
- Other costs. Late fees, prepayment penalties and any annual card fees are not included.