Compare your current debt payments with a consolidation loan. See exactly how much you could save—or what a consolidation would cost you.
Your current debts
Consolidation loan terms
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This calculator assumes you keep paying your current debts on schedule. Consolidation typically requires a hard credit inquiry, which may temporarily lower your credit score. Not all consolidation options are available to all borrowers. This is educational only, not financial or lending advice.
Is Debt Consolidation Right for You?
Debt consolidation can be a powerful tool to simplify your finances and save money—but only if the math works in your favor. This calculator helps you figure out whether consolidation makes sense for your situation.
When Consolidation Works
Consolidation saves money when you qualify for a lower interest rate than your current debts. For example, if you have multiple credit cards at 20%+ and you can consolidate into a personal loan at 8%, you'll save significant interest.
Consolidation also simplifies your life: one payment instead of three, one due date instead of multiple. This can reduce stress and make budgeting easier.
When Consolidation Costs More
If your consolidation rate is higher than your current average rate, you'll pay more in total interest—even if your monthly payment drops. Extending the term (stretching it to 60+ months) can lower your payment but increases total interest paid dramatically.
Watch Out For These Traps
- Origination fees: Many consolidation loans charge 2-5% upfront. Factor this into your savings calculation.
- Hard inquiry hit: Applying for consolidation triggers a hard credit inquiry, which can temporarily lower your score by 5-10 points.
- Temptation to re-borrow: Once you've paid off credit cards through consolidation, resist the urge to rack up new balances on them.
- Longer payoff time: A lower monthly payment can mean you're in debt longer overall.
Consolidation Alternatives
Before consolidating, consider: negotiating with creditors for lower rates, using the debt snowball or avalanche method, seeking credit counseling, or exploring balance transfer cards with 0% intro rates.
FAQ
Does consolidation hurt my credit score?
Yes, initially. You'll take a hit from the hard inquiry (5-10 points) and from opening a new account. However, as you make on-time payments and lower your credit utilization, your score typically rebounds within 3-6 months and ends up higher long-term due to lower overall debt.
What's the difference between consolidation and refinancing?
Consolidation combines multiple debts into one. Refinancing replaces an existing single loan with new terms. Sometimes people use "refinance" and "consolidate" interchangeably, but technically they're different strategies.
Can I consolidate with bad credit?
It's harder but not impossible. Bad-credit personal loans exist but come with higher rates. You might also explore credit counseling or debt management plans through nonprofits. A co-signer can improve your odds.
Should I pay off or close old credit cards after consolidation?
Don't close them. Closing old accounts lowers your average account age and increases your utilization ratio, both of which hurt your credit. Keep them open with $0 balance and use occasionally to keep them active.