Debt Consolidation Calculator
Free debt consolidation calculator. Combine multiple credit cards and loans into one payment and see interest saved, effective APR with fees, and break-even vs the current plan. Full amortization and Excel export.
Frequently asked questions
How does a debt consolidation loan actually save money?
A consolidation loan replaces several high-rate balances (typically credit cards at 18–29% APR) with one lower-rate installment loan (typically 8–15% APR). The savings come from three things: a lower blended interest rate, a fixed amortizing payoff schedule instead of minimum-payment revolving debt, and — importantly — behavior: you stop adding new charges to the closed cards. This calculator compares total interest and total out-of-pocket cost of both paths so you can see the real dollar delta for your specific balances.
What is the "effective APR" on a consolidation loan and why does it differ from the quoted rate?
The quoted APR is charged on the amount borrowed, but origination fees (typically 1–8%) reduce the cash you actually receive (upfront-fee) or increase the balance you finance (financed-fee). The effective APR solves for the annual rate that equates your net proceeds to the payment stream — this is the true cost of the loan to you and will always be higher than the quoted APR whenever a fee is present. Use effective APR, not the sticker rate, when comparing offers.
When does consolidation NOT save money?
Three common cases: (1) the consolidation APR plus origination fee is close to or above your weighted current APR — the effective APR check catches this; (2) you stretch a 3-year balance into a 7-year loan, which lowers the payment but pays more interest overall; (3) you keep charging the paid-off cards, which just adds new debt on top of the consolidation loan. This calculator flags scenarios where interest saved is zero or negative.
Should I finance the origination fee or pay it upfront?
Paying the fee upfront keeps the loan balance smaller, so your monthly payment and total interest are both slightly lower. Financing the fee is easier on cash flow but every dollar of fee accrues interest for the life of the loan. Toggle the fee-handling switch in the calculator to see the exact monthly and total-cost difference for your numbers.
Does the calculator account for prepayment penalties on my existing debts?
No. It assumes you can pay off each existing balance in full on day one without penalty. Most credit cards have no prepayment penalty, but some personal loans and auto loans do. Check each note before consolidating; any penalty should be added to the origination-fee inputs to reflect the true cost.
How is "baseline payoff" calculated when I have several debts?
The baseline amortizes each debt independently at the monthly payment you enter, using the standard formula P·r·(1+r)ⁿ / ((1+r)ⁿ−1) inverted for the payoff period. Baseline payoff months equals the LAST debt to hit zero. If any single debt has a payment below its interest-only floor (balance × APR ÷ 12), it will never amortize — the calculator flags that debt so the comparison is not misleading.