Current Monthly
New Monthly
Monthly Savings
Total Interest Saved
Payoff Time Saved
| Scenario | Total Paid | Interest | Time (Months) |
|---|---|---|---|
| Current Debts | -- | -- | -- |
| Consolidated | -- | -- | -- |
Debt Consolidation: A Comprehensive Guide
The Debt Consolidation Calculator helps merge multiple high-interest debts (credit cards, personal loans) into one lower-rate loan. Input up to 5 debts and new terms for payment reduction, interest savings, and faster payoff insights. Our free tool compares scenarios with charts and tables. This guide covers benefits, types, calculations, pros/cons, and tips for successful consolidation.
What is Debt Consolidation?
Combining debts into a single loan with better terms. Types: personal loan, balance transfer card, home equity, debt management plan.
Why Consolidate Debt?
Advantages:
- Lower Rate: Save on interest.
- Single Payment: Simplify budgeting.
- Faster Payoff: Fixed term.
- Credit Boost: Lower utilization.
Link to DTI Calculator.
How Consolidation is Calculated
Steps:
- Total Balance: Sum debts + fee.
- Current: Sum min payments; simulate payoff for interest/time.
- New: EMI on total at new rate/term.
- Savings: Difference in payment/interest/time.
Example: 3 debts $15k total @ avg 18%, mins $450 → consolidate @8% 60mo → $304/mo, save $8k interest.
Pros and Cons
Pros: Savings, simplicity, credit improvement.
Cons: Fees, longer term risk, qualification needed.
When to Consolidate
- High rates >12%.
- Good credit for low rate.
- Disciplined to avoid new debt.
Use with Early Payoff Savings.
Tips for Success
- Shop Rates: Credit unions, online lenders.
- Close Old Accounts: Prevent reuse.
- Extra Payments: Accelerate.
- Avoid Fees: No origination if possible.
Common Mistakes
- New Debt: Racking up cards again.
- Longer Term: Pay more interest.
- Ignoring Fees: Erase savings.
- No Plan: Miss payments.
Alternatives
Snowball/avalanche, nonprofit counseling, bankruptcy (last resort).
Conclusion
Debt consolidation streamlines finances and cuts costs if done right. Our calculator reveals true savings for informed decisions. Explore Loan Comparison or Student Loan tools.