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Debt Consolidation Calculator

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Debt consolidation lets borrowers combine multiple credit card debts into a new loan, a new credit card, or a debt management program.

A loan calculator can help you determine if consolidating credit card debt is the best way forward.

Debt consolidation loans should offer lower interest rates and monthly payments than what you are charged on your credit card debt. Our consolidation calculator does the math for you. All you do is enter some basic info for a quick breakdown of how much you can save.

Estimate Your Debt Consolidation Savings

You will need the APR of your debt consolidation loan and the loan term or the number of years you will repay it.

Next, it will ask for information relating to your current debts. Fill in the balance, monthly payment, and yearly interest rate of each loan you plan to consolidate.

This may include credit cards or other forms of unsecured debt like medical bills or personal loans. It will NOT include mortgages or car loans. Those are secured loans.

After hitting submit, your results will show up in a section below the calculator.

How to Use a Debt Consolidation Calculator

Most of the info you need to profit from the loan calculator can be found in your credit card statement. This is thanks to the Truth in Lending Act, which requires lenders to enclose loan cost information so you can easily compare alternatives.

Step 1

Gather all your credit cards and input the amount you owe, the minimum amount due, and the interest rate paid on each card.

Step 2

Go online or call a bank or credit union to determine the interest rate and payoff time for a debt consolidation loan. Debt consolidation loan rates could vary depending on whether you opt for a home equity loan, personal loan, or zero-percent balance transfer as your debt consolidation loan.

Step 3

Enter the interest rate and terms of your new debt consolidation loan. The loan calculator will compare costs and make plain how much money you can save with a debt consolidation loan.

How Much Can You Save with a Debt Consolidation Loan?

Borrowers can save thousands by consolidating their debts, but the value of their loan often comes down to the strength of their credit profile.

Credit card APR depends largely on your credit score. In 2020, borrowers with super prime rates (740-plus) had APRs around 16%-18%. Prime and subprime borrowers (580-749) paid on average from 20%-24% APR. Those with a credit score below 580 were subject to the highest rates–24% APR or more.

Borrowers with poor credit have the most to gain from consolidating debt by lowering their APR. However, borrowers with good credit will qualify for the lowest interest rates.

Missing payments and accruing late fees can lead to higher penalty APRs, regardless of credit score.

Here’s an example of how much you can save with the aid of debt consolidation:

Say you owe $15,000 in credit card debt with an APR of 20%. Your monthly payment is $450. You would pay off the loan in 50 months, costing you $7,077 in interest.

A loan to consolidate the same amount at a 10% interest rate would save you $3,117. Your monthly payment would also drop from $450 to $395, and you’d pay off the loan two months earlier. You can pay off the loan earlier (and save even more on interest) by bolstering your monthly payments with the extra cash.

Benefits and Risk of Debt Consolidation

Consolidating credit card debt will simplify your life, as far as your debts are concerned, and may even deliver lower interest rates. Here’s a breakdown of some pros and cons to expect with debt consolidation.

Pros of Debt Consolidation

  • Save Money on Interest: Lowering your interest rate could save you hundreds or even thousands of dollars. It should also make it easier to keep up with monthly payments, eliminating debt more swiftly and preserving cash flow.
  • Simpler Payment Schedule: Consolidating your credit accounts can reduce the stress of tracking multiple bills every month.
  • Reduced Risk of Late Fees: With fewer payments to juggle each month, the likelihood of a due date slipping your mind drops significantly. On-time payments will lead to a healthier credit profile and higher credit score.

Debt consolidation is not a cure-all for your money problems despite the undeniable upside.

Cons of Debt Consolidation

  • You could pay more in interest: Lowering your monthly payment could bring relief monthly, but you may pay more in interest over time. Taking longer to pay off the loan will give interest more time to grow.
  • Secured loans could jeopardize collateral: Some banks offer secured debt consolidation loans. This could help pay off larger debt loads, but your collateral (house, car, savings, etc.) will belong to the bank if you’re unable to pay off the loan.

Ways to Consolidate Debt

Debt consolidation allows people to simplify their debts, save money, or lower their monthly payments. There are a few ways to consolidate debt, but the best method will depend on your income, credit score, debt-to-income ratio (DTI), and access to collateral.

Here are some common methods for consolidating debt.

Debt Management Plan

A debt management plan (DMP) consolidates your eligible debts into a single payment to pay off in 3-5 years. Debt management agencies work with credit card companies to reduce your payments to levels you can afford, and joining a plan doesn’t require taking out another loan. There’s no credit score requirement, making it a good option for people struggling to qualify for other debt consolidation methods.

Personal Loan

Another option is to take out a personal loan for debt consolidation, often called a debt consolidation loan. This could lower your interest rates; however, the best rates are reserved for consumers with the best credit. Some lenders offer debt consolidation loans for bad credit, but reducing your rate becomes more of a challenge. Nor is it a guarantee that you will be approved at all. Many online lenders have prequalification options, so you can check possible rates without a hard credit check. This can help preserve your credit score if you plan to do some (recommended) rate shopping.

Balance Transfer Credit Card

Balance transfer credit cards let you transfer the balance of multiple debts to a new card with a low-interest rate. This includes deals like 0% APR for 12-18 months. The value to consumers is to pay off the card before the promotional period expires. If you can pay off the debt quickly, this method will save you in interest, but make sure the transfer fees are worth the effort. Most balance transfers include fees of 2%-3% of the amount transferred.

Home Equity Consolidation Loan

You can consolidate your debts with a home equity loan. This is also called a second mortgage and can be a practical option depending on how much equity you can borrow. Usually, the max loan amount is limited to 85% of your home’s market value. So, if your home is worth $200,000, the most you could borrow would be $170,000. This gives you the potential for high loan amounts and even lower interest rates.

This option has one obvious pitfall – foreclosure. If you default on the loan, you could lose your home. It’s not worth the risk if you’re dealing with a small sum of credit card debt. Even those managing more considerable debts should look at options that don’t require collateral before looking to home equity loans for consolidation.

Borrow from your 401k

Another popular method of consolidation includes taking out a 401k loan. Federal law limits you to $50,000 or 50% of the amount in your account.

According to Vanguard’s 2019 How America Saves report, 13% of 401k savers have an outstanding loan, with an average balance of $9,900. The loan is tax-free with no early-withdrawal penalty. However, if you lose or leave your job, you have to repay the money, possibly as early as the next Tax Day.

Without significant cause, it’s rarely a good idea to disrupt your 401k because it can derail your retirement prospects in unpredictable ways.

Is Debt Consolidation Right for Me?

Sometimes debt consolidation proves ineffective in relieving debt. Some borrowers face deficits uncut for consolidation–just too much debt. While others won’t have the credit profile lenders seek. And still, some will lack the income needed to make debt consolidation work.

Fortunately, there are several alternatives to debt consolidation, regardless of your situation. We’ve laid out a few below.

  • Managing a budget: The path out of debt implies spending less than you make. It means having a clear picture of how much money comes in and goes out each month. Creating a budget will help you visualize the amount reserved for bills versus what’s free to spend on things you enjoy. Rather than locking you in, a budget will liberate you from the laborious process of deciding the best use of your money.
  • Debt Settlement: Debt settlement is a way to settle your debts for less than you owe, though with severance consequences.. Depending on your ideology, this might sound fantastic or absurd. However, debt settlement is not a free pass out of debt. Eliminating debt is excellent, but borrowers must measure the implications of their chosen method. For instance, the debt settlement company will try to agree with your creditors on how much (or how little) you need to pay to close the debt. Negotiations can drag on for 24-36 months and increase the interest and late fees you owe. Borrowers will also owe a percentage of the forgiven debt to the company doing the negotiating for them.
    None of this will look good on your credit report, but it is a way forward for those who have exhausted other viable options. The adverse effects are financially damaging: Not paying what you owe stays on your credit report for seven years. Your credit score eventually will recover if you pay your bills on time and manage your credit responsibly.
  • Bankruptcy: This option offers borrowers a fresh start, but severe consequences may take some adjustments. Bankruptcy will eliminate most of your debt while tarnishing your credit score and staining your credit report for 7-10 years. This is often the last resort, but it’s a feasible option for the discerning borrower when it doesn’t look like you’ll be able to pay off your debts in five years or less.

Get Started Consolidating Your Debt

There are many ways to begin debt consolidation. Credit counseling can help you create a budget and determine the best option for moving forward. Speaking with a counselor can help ground you in debt management strategies. It may lead to a debt management program, which is a straightforward and effective method for consolidating debt without taking out a loan.

You can also research and rate shop for different debt consolidation companies online. Many online lenders service an array of credit profiles. Don’t count yourself out because of your poor credit history. Do the research and compare costs across several lenders and financial services before making a final decision. Remember, nonprofit credit counselors are available to offer free advice. They can help you determine if you’re making a decision that will positively affect your financial future.

Definition of Debt Consolidation Terms

Below is a brief definition of each of the terms used by’s Debt Consolidation Calculator to help you better understand why using a debt consolidation loan could save you time and money.

Each term is broken down in the category it appears under.

Consolidated Loan Information

Annual Percentage Rate: Common term that describes the interest rate charged for borrowing money. It represents the actual cost of the money over the loan term.

Number of Years: Length of time you expect it will take to pay off your debt consolidation loan.

Current Debt Information

  • Balance: The amount owed.
  • Monthly Payment: Minimum amount expected by the credit card company. Usually calculated at 2%of balance owed.
  • Yearly Rate: Same as an annual percentage rate.

Terms under Current Debt Analysis

  • Total debt balance: Amount owed.
  • Total monthly payment: Amount owed each month.
  • Total remaining interest to be paid: Amount of interest already paid over the life of the loan.
  • Total number of payments remaining: Number of months left to pay off the balance owed.

Consolidated Loan Analysis

  • Proposed loan amount: The amount you would borrow to pay off all credit card bills.
  • Required monthly payment: The amount you would pay each month for the loan.
  • Total remaining interest to be paid: The interest paid when the loan is paid off.
  • Total number of payments remaining: Number of monthly payments you must make on the loan.

If You Apply Your Monthly Savings to the New Loan

Monthly savings amount: Money saved each month by using a debt consolidation loan versus paying on the credit card terms.

Total remaining interest to be paid: Amount of interest you would pay IF you add the amount you save each month to your regular monthly payment. For example: If your monthly loan payment was $207 and you saved $108 each month, add the two together to make a payment of $315 each month. This allows you to pay off the loan much faster and save much more money.

Total number of payments remaining: Number of payments you would make to retire the loan, if you chose to add the monthly savings and monthly payment together. So, instead of making 120 payments for your 10-year loan, you would pay it off in 66 months, or just about half the time.

About The Author

Bents Dulcio

Bents Dulcio writes with a humble, field-level view on personal finance. He learned how to cut financial corners while acquiring a B.S. degree in Political Science at Florida State University. Bents has experience with student loans, affordable housing, budgeting to include an auto loan and other personal finance matters that greet all Millennials when they graduate. He has a prodigious appetite for reading, which he helps feed with writing from Scottish philosopher Adam Smith, the “Father of Capitalism.” Bents writing also has been published by JPMorgan Chase, TheSimpleDollar and


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