Debt Consolidation
Consolidation means replacing several debts with one loan. This calculator shows what that single loan looks like and whether it beats carrying on as you are.
Inputs
Debts: tap Add a debt for each one you're considering consolidating, and enter its balance, rate, and the payment you make now. You'll need at least one. The calculator will prompt you if the list is empty. The heading keeps a running total as you add them.
Loan Name: what to call the consolidated loan if you add it to your budget. Left blank, it's called Consolidation loan.
Then tap Consolidate.
What you get
Consolidated balance, the combined total, with Weighted interest, Minimum payment, and the number of Debts beneath it.
Weighted interest is the blended rate: each debt's rate weighted by its balance, so a large low-rate debt pulls the average down more than a small high-rate one.
Minimum payment is set at 3% of the consolidated balance. A real lender's terms will set the real one.
Against carrying on puts the two paths side by side:
- ›You pay now against Consolidated, per month
- ›Debt-free now against Debt-free consolidated
- ›Interest either way
A note under it says whether consolidating saves interest at these numbers, or costs more because the blended rate isn't low enough to pay for the longer term.
If one of the payments you entered is smaller than the interest that debt builds up, there's nothing to compare against, since that debt would never be paid off. The result says so instead.
What consolidation actually does
Sometimes it genuinely helps. Often it doesn't, and the appeal is emotional rather than financial. Four statements becoming one feels like progress even when the numbers haven't moved.
It helps when the new rate is meaningfully lower than the weighted average of what you're replacing, and the term isn't longer.
It doesn't help when the rate is similar and the term is longer. You'll pay less each month and more overall. That's not consolidation. It's refinancing your problem into the future.
It actively hurts when there are significant origination fees, or when clearing your cards frees up credit you then use again. The second one is the common failure: the cards go to zero, the balances slowly return, and now there's a consolidation loan too.
Checking a real offer
This calculator doesn't ask for a lender's terms. It works out the blended rate of what you already owe. Use that as the benchmark for any offer you receive.
The rate, against the weighted interest. Not against your worst card, but against the blended rate of everything you're replacing. A 14% consolidation loan looks great next to a 24% card, and much less great if most of your balance sits at 9%. Lower than the weighted interest here is a saving. Higher is not.
The term. A longer term will lower your payment regardless of rate. Compare total cost, not monthly cost.
The fees. Origination fees come off the top and can erase a modest rate improvement entirely.
Whether the payment is one you'll actually make. A consolidation loan has a fixed schedule. That's a benefit because it forces the pace, but only if the payment is sustainable.
To price a specific offer's payment and total interest, run its amount, rate, and term through Amortization.
The alternative worth checking first
Before consolidating, run the Debt Payoff Calculator on the same debts with an extra monthly payment.
You may find that a disciplined avalanche approach on your existing debts beats the consolidation offer, without any new borrowing, fees, or credit application. That's frequently the case with offers aimed at people who feel overwhelmed.
Add To Budget
Add To Budget adds the consolidated loan to your Budget Builder as a single debt, using its name, the consolidated balance, the weighted interest, and the minimum payment. You'll see Consolidated loan added to budget. with a Go To Budget shortcut.
It doesn't remove the original debts. If they're already in your budget, delete them in the Builder so the balance isn't counted twice.
The most complete answer comes from building it both ways: your debts as they stand, and the consolidated version. Compare the resulting plans in the Archive and you're comparing real payoff dates rather than loan terms.
Name them clearly, such as Debts as-is and If consolidated, so you can tell them apart later. See Naming Your Budget.
A caution
Consolidation offers are marketed hardest to people who are struggling, and the offers aimed at that group are frequently the worst ones: long terms, high fees, and a lower monthly payment presented as relief.
Run the numbers before you agree to anything. If the total cost is higher, it's not help.