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Debt Consolidation Calculator Guide
This compares what your current debts will actually cost against what a single consolidation loan would cost — including the part most calculators quietly skip.
Each existing debt is simulated at its own APR and payment until it clears. The consolidation loan is amortised over its term.
Then the two total interest figures are compared. A lower rate does not automatically mean a lower cost.
The Trap: A Lower Rate That Costs More
Here's the example this calculator loads by default. $10,000 across three cards at a blended 21.4%, paying $400 a month, costs about $3,393 in interest and clears in roughly three years.
Consolidate that at 12% — nearly half the rate — over five years, and you pay about $3,347. You cut the rate by 44% and saved $46.
Where did it go? The term. You stretched three years into five, and two extra years of interest ate almost the entire rate cut. Push the term to seven years at the same 12% and consolidating costs you more than doing nothing.
The Payment Drop Is Real — and It's the Bait
Consolidation genuinely lowers your monthly payment, from $400 to about $222 in that example. That's a real improvement in cash flow and it can be exactly what someone needs.
Just be clear about the trade: you're paying about the same total, over longer, for breathing room now. That's a legitimate choice. It is not "saving money", and the industry sells it as though it were.
What Actually Makes Consolidation Work
Two conditions. A genuinely lower rate, and a term no longer than you'd have taken anyway. Get both and it works. Get only the first and you're mostly refinancing your patience.
The other thing that makes it work is not using the cards again. This is the failure mode that dwarfs all the arithmetic: consolidate $10,000, feel relieved, and eighteen months later carry $10,000 of new card debt plus the consolidation loan. Nothing in the maths protects against that.
Watch the Fees
Origination fees of 1–8% are common on personal loans, and balance transfers typically charge 3–5% upfront. A 3% fee on $10,000 is $300 — which can quietly erase a marginal saving. This calculator adds the fee to the loan so it shows up in the total, where it belongs.
Secured Consolidation Changes the Risk, Not Just the Rate
Rolling card debt into a home equity loan gets you a much lower rate because your house is now the collateral. You've converted unsecured debt — which, at worst, damages your credit — into debt that can take your home. That's not a detail; it's the entire nature of the obligation changing.
Related: debt avalanche calculator, debt snowball calculator, loan payment calculator.
These results are estimates for education and planning, not financial advice. Actual returns, rates, and terms vary — check with a qualified professional before making decisions.
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