Debt Consolidation

Consolidation means replacing several debts with one loan. This calculator tells you whether that's actually an improvement or just a rearrangement.

Inputs

Add each debt you're considering consolidating, with its balance, rate, and payment. You'll need at least one — the calculator will prompt you if the list is empty.

Then compare against the terms of the consolidation loan you're being offered.

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, that'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.

What to check

The rate, against the weighted average. Not against your worst card — 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%.

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 — it forces the pace — but only if the payment is sustainable.

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 pushes the debts into your Budget Builder inputs.

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 — 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.