The option most calculators leave out
Which debt clears when
If you carry on exactly as you are, paying the amounts above and nothing more.
| Debt | Balance | Rate | Interest paid | Cleared after |
|---|
Debt consolidation means taking one new loan to pay off several old ones. It can be a genuinely good move, and it can also be an expensive way to feel better for a month. This calculator shows you which one it would be, using your own balances.
It compares three things most calculators never put side by side: carrying on as you are, keeping the same total payment but attacking the most expensive debt first, and taking the new loan.
What consolidation actually changes
It does not reduce what you owe. It changes three things: the interest rate, the number of payments, and the number of bills. As the Consumer Financial Protection Bureau puts it, “taking on new debt to pay off old debt may just be kicking the can down the road”.
Consolidation is worth doing when the new rate is clearly below the average rate you are paying now, and when the term is not much longer than the time you would have taken anyway. It goes wrong when the payment falls because the debt has been stretched from three years to seven.
The fee matters more than people expect
Personal loans often carry an origination fee, typically taken out of the money sent to you. Borrow $20,000 with a 3% fee and $19,400 arrives, but you repay the full $20,000 with interest. The calculator handles both ways of charging it.
Highest rate first, or smallest balance first?
Two ways to attack several debts at once:
- Avalanche. Pay the minimum on everything, and put every spare dollar on the highest rate. This always costs the least in interest.
- Snowball. Put the spare money on the smallest balance, so accounts disappear sooner.
The snowball costs more, and the calculator shows exactly how much more for your debts. It is not irrational, though. A study in the Journal of Marketing Research in 2012 found that closing accounts predicted people finishing a repayment programme, regardless of the size of the balance closed. If the momentum is what keeps you going, the extra interest is the price of that.
Where the default rates come from
The starting figures are the Federal Reserve's published averages: 22.15% for credit card accounts charged interest and 11.86% for a 24-month personal loan, both from the Q2 2026 G.19 release. Change them to your own offers, because the gap between those two numbers is the whole case for consolidating.
Before you sign
- Do not re-run the cards up. This is the way consolidation usually fails: the cards go back to their old balances and now there is a loan as well.
- Be careful with home equity. Rolling card debt into a mortgage or HELOC swaps unsecured debt for debt secured on your house. The FTC's warning is plain: if you cannot make the payments, “you could lose your home”.
- Check for a prepayment penalty on the loans you are paying off, and an origination fee on the new one.
- Debt consolidation is not debt settlement. Settlement companies cannot legally collect a fee before they settle a debt, and forgiven debt can be taxable. If someone asks for money up front or tells you to stop talking to your creditors, walk away.
- Free help exists. Non-profit credit counselling agencies will look at your budget for nothing.
Quick answers
Does debt consolidation save money?
Only if the new rate is lower than what you pay now and the term is not much longer. A lower monthly payment over a longer term usually costs more in total. The calculator shows both numbers.
Does consolidating hurt your credit score?
A new loan means a hard credit check and a new account, which can dip the score briefly. Paying balances down and keeping the old cards open with low balances usually helps over time.
Is it better to consolidate or pay debts off one by one?
Compare the two above. Keeping your current payment and attacking the highest rate first costs nothing and often beats a consolidation loan with a fee. A loan wins when its rate is much lower than your cards.
What is the difference between debt consolidation and debt settlement?
Consolidation pays your debts in full with a new loan. Settlement tries to get creditors to accept less than you owe, which damages your credit, can be taxable, and attracts scams.
What credit score do I need to consolidate debt?
Lenders price by score rather than refusing outright, but the rates worth consolidating at usually go to good credit. If the offered rate is close to your card rate, consolidating is not worth the fee.
Sources
- CFPB, “What do I need to know if I’m thinking about consolidating my credit card debt?”
- Federal Trade Commission, “How to get out of debt” (home equity risk, debt settlement rules)
- Federal Reserve, G.19 Consumer Credit, Terms of Credit (credit card and 24-month personal loan rates, Q2 2026, released 8 September 2026)
- David Gal and Blakeley B. McShane, “Can Small Victories Help Win the War? Evidence from Consumer Debt Management”, Journal of Marketing Research 49:4 (2012), on paying the smallest balance first.
- CFPB, prepayment penalties