Debt Consolidation Calculator
See if consolidating your debts into a single personal loan saves you money. Enter your existing credit cards and loans below, then compare against a consolidation loan. All calculations run in your browser — no data is stored or shared.
Your Existing Debts
Consolidation Loan
Enter your debts and click Compare Consolidation
the debt consolidation calculator will show your potential savings at a glance
How Debt Consolidation Works
Debt consolidation replaces multiple existing debts — credit cards, personal loans, medical bills — with a single new loan. Instead of juggling several payments at different interest rates and due dates, you make one fixed monthly payment at a single interest rate. The primary goal: secure a lower rate than what you're currently paying on average, reducing both your monthly cash outflow and your total interest cost.
The Math Behind Consolidation: Weighted Average Rate
To determine if consolidation saves you money, you need to know your weighted average interest rate — the single rate that represents your blended borrowing cost, where larger balances carry more weight:
If your consolidation loan's APR is lower than your weighted average rate, you save money on interest. If it's higher, consolidation costs more — unless the benefit of simplified payments outweighs the extra cost for your situation.
Worked Example: Consolidating 3 Credit Card Debts
Let's walk through a realistic scenario based on 2026 data. According to the Federal Reserve Bank of New York, the average U.S. household carrying credit card debt has approximately $7,000 in balances at an average APR of ~22%.
| Debt | Balance | APR | Current Min Payment |
|---|---|---|---|
| Credit Card A | $8,000 | 24% | $240 |
| Credit Card B | $5,000 | 19% | $150 |
| Store Card C | $2,000 | 29% | $80 |
| Total | $15,000 | 22.6% weighted avg | $470 |
Weighted average: (8,000 x 0.24 + 5,000 x 0.19 + 2,000 x 0.29) / 15,000 = (1,920 + 950 + 580) / 15,000 = 22.6%
Now consider a 60-month consolidation loan at 12% APR (the 2026 average for a good-credit borrower):
Monthly payment: $333.67
Total payment: $20,020 | Total interest: $5,020
Without consolidation (paying minimums):
Monthly total: $470.00
Estimated total interest (if paying minimums): $12,000+
Results:
Monthly savings: $470 - $334 = $136.33/month
Estimated interest savings: $7,000+
Debt Avalanche vs. Debt Snowball Method
If you choose to pay off debts individually rather than consolidating, two popular strategies exist:
- Debt Avalanche (mathematically optimal): Pay minimums on all debts, then direct any extra money to the highest-rate debt first. This minimizes total interest paid. In the example above, you'd pay off Store Card C (29%) first, then Credit Card A (24%), then Credit Card B (19%).
- Debt Snowball (behavioral approach): Pay off the smallest balance first regardless of rate. In the example, you'd pay off Store Card C ($2,000) first, then Credit Card B ($5,000), then Credit Card A ($8,000). This provides quick wins and motivation but costs more in total interest.
A consolidation loan effectively combines the best of both: one predictable payment at a rate that's hopefully lower than your highest-rate debts. But you must commit to not running up new balances on the cards you just paid off.
When Consolidation Makes Sense
- Your consolidation loan rate is meaningfully below your weighted average rate
- The new monthly payment fits comfortably within your budget
- You value simplified finances — one payment, one due date, one lender
- You are committed to not accumulating new credit card debt
When Consolidation Does NOT Make Sense
- The consolidation rate exceeds your weighted average existing rate
- High origination fees (3-8% of loan amount) erase the interest savings
- A very long term dramatically increases total interest despite lower monthly payments
- You continue using credit cards and end up with both the consolidation loan and new card balances
- Your total debt is small enough that paying it off directly is faster
For other personal loan scenarios, try our Simple Personal Loan Calculator or return to the Personal Loan hub. For mortgage-related tools, see our Refinance Calculator.
Frequently Asked Questions
How does debt consolidation work?
Debt consolidation replaces multiple existing debts (credit cards, personal loans, medical bills) with a single new loan. Instead of managing several payments at different rates and due dates, you make one fixed monthly payment. The goal is to secure a lower interest rate than the weighted average of your existing debts, reducing both your monthly payment and total interest cost.
How do I know if debt consolidation will save me money?
Consolidation saves money when the new loan's interest rate is lower than the weighted average rate of your existing debts. Enter each existing debt and the consolidation loan terms into the debt consolidation calculator above — it shows your monthly savings, total interest savings, and new payoff timeline. Even a 5% rate reduction on $20,000 of credit card debt can save over $3,000 in interest.
What is a weighted average interest rate?
A weighted average interest rate accounts for different debt balances — larger debts carry more weight. Formula: sum of (balance x rate) divided by sum of all balances. For example, $10,000 at 24% and $5,000 at 12% gives (10,000 x 0.24 + 5,000 x 0.12) / 15,000 = 20% weighted average. If your consolidation loan rate is below 20%, you save on interest.
What is the difference between debt avalanche and debt snowball?
The debt avalanche pays off debts from highest to lowest interest rate, minimizing total interest (mathematically optimal). The debt snowball pays off the smallest balance first, providing psychological wins through quick eliminations (behavioral approach). A consolidation loan effectively combines both by giving you one fixed-rate payment that is often lower than your highest-rate debts.
What credit score do I need for a debt consolidation loan?
Most lenders require a minimum FICO score of 580-600 for a debt consolidation loan, though the best rates go to borrowers with scores above 660. At fair credit (600-659), expect rates of 15-25% APR. At good credit (660-719), rates fall to 10-15%. At 720+ you may qualify for rates as low as 8%. Even a fair-credit consolidation at 18% can save significantly against credit card debt at 25%+.
When does debt consolidation NOT make sense?
Consolidation may not be the right choice if: (1) the new loan rate is higher than your weighted average existing rate, (2) the loan has significant origination fees (3-8%) that outweigh interest savings, (3) extending the term dramatically increases total interest despite a lower monthly payment, or (4) you continue accumulating new credit card debt after consolidating. Always run the numbers using the debt consolidation calculator above before deciding.
Sources & Methodology
Our debt consolidation analysis and rate data are based on these authoritative sources:
- Federal Reserve Bank of New York Consumer Credit Panel — Quarterly Report on Household Debt and Credit, tracking aggregate credit card balances, delinquency rates, and personal loan originations. Q1 2026 report shows average credit card APR at ~22% for accounts assessed interest. newyorkfed.org/microeconomics
- Federal Reserve G.19 Consumer Credit — Average interest rates for commercial bank personal loans (~12% as of mid-2026). federalreserve.gov
- CFPB Consumer Guides — Guidance on debt consolidation, including comparison shopping tips and understanding total loan cost. consumerfinance.gov
- FTC Consumer Information — Debt consolidation and credit counseling guidance, including how to spot predatory lending practices. consumer.ftc.gov
Weighted average rate calculation uses standard financial methodology. Consolidated payment calculated using the amortization formula: M = P x r(1+r)^n / ((1+r)^n - 1). Existing debt payoff estimates assume fixed minimum payments until payoff.