Debt Consolidation Calculator

Consolidation swaps several debts for one loan. You borrow enough to zero out the old accounts, then make a single fixed payment until the loan ends. Take this calculator's defaults: $30,000 of card debt at an 18% average rate, with $900 a month going out. On that path the debt takes about 47 months to clear and costs roughly $11,900 in interest. Move the same $30,000 to a 9.5% loan over five years and the payment drops to $630, which frees $270 a month, while total interest falls to about $7,800. You stay in debt 13 months longer yet pay around $4,100 less, because the rate cut outweighs the stretch. The second change is administrative but real. One due date replaces four or five, so there are fewer chances to miss a payment and the payoff lands on an actual calendar date instead of drifting. None of it works unless the new rate sits clearly below the weighted average of the debts it replaces, so compute that average before you shop.

Four tools consolidate debt, and the cheapest depends on how much you owe and how fast you can repay it. A 0% balance transfer card is hard to beat for a balance you can kill inside the promotional window, since the up-front fee is small next to a year of interest at 22%. Personal loans handle larger balances that need years rather than months. Home equity borrowing prices lowest of all but puts your house behind the debt. A debt management plan skips new borrowing entirely: a nonprofit counselor negotiates your card rates down and you repay through one monthly deposit. The FTC's consumer advice explains how to tell a legitimate counseling agency from a debt relief operation that charges steep fees for very little.

Card minimums are designed to stretch. Most are set at 1% to 2% of the balance plus that month's interest, or a flat $25 to $35, whichever is larger, and the minimum shrinks as the balance does. Pay only the minimum on $15,000 at 22% and the payoff runs roughly three decades, with more than $20,000 of interest along the way. A consolidation loan breaks the pattern because the payment never shrinks. The same $15,000 at 10% over five years is a fixed $319 a month, $4,122 in interest, and a balance of zero at month 60. The starting payments are similar; the difference is that one of them actually ends.

The rate is the first thing that can go wrong. If offers come back above your weighted average, which is common with scores under 660, the loan has no job to do. The term is the second. At this calculator's defaults, stretching to seven years cuts the payment to $490 but pushes total interest to about $11,200, within about $700 of the $11,900 the current path already costs. That trade buys three extra years of debt and saves almost nothing. The cards themselves are the quiet risk: many people who consolidate run new balances on the freshly cleared cards within a year or two, and then the loan sits on top of fresh 22% debt. If overspending built the balances, fix the spending first, because a loan only rearranges the symptom. Two narrower warnings. Rolling unsecured card debt into a home equity loan converts a credit problem into a foreclosure risk if your income slips. And if accounts have already been charged off and collectors are calling, a new loan rarely helps; federal rules limit how collectors can contact you and require them to verify the debt on request, and the CFPB's debt collection answers explain how to use those rights and negotiate from there.