What this calculator does
Find out whether swapping your debts for one new loan would actually save you money. This calculator compares two paths. One is to keep paying each current debt the way you do now. The other is to take out one new loan that pays them all off. That's called debt consolidation. For each path, you see the monthly payment, how long until you're debt-free, and the total interest. The new loan's setup fee (its origination fee) is taken off the savings, so the comparison is fair.
Consolidation usually helps when two things are true. The new rate is clearly lower than the rates you pay now. And the new loan doesn't last much longer than your current payments would. A lower monthly payment on its own can fool you. Stretching the same debt over more years can cost more interest, even at a lower rate. The calculator shows both the monthly change and the total. That way, you can see which effect wins.
Where it's used
Why this math matters outside the classroom:
- Personal loan offers. Borrowers check that a 4-year loan at 11% on $14,500 of cards costs $386.35 a month against $470 now.
- Fee-adjusted borrowing. With a 3% fee taken from the proceeds, borrowers divide $14,500 by 0.97 and apply for about $14,948.
- Credit counseling. Counselors run each card forward at its own rate and payment to show a client the true cost of staying the course.
- Comparing terms. Households compare a 3-year and a 5-year consolidation loan to see how much extra interest the lower payment costs.
- Classroom modeling. Students model a card balance as a recursive sequence, multiplying by 1 + APR ÷ 12 and subtracting the payment each month.
Grade level and standards: Grades 11–12; Common Core State Standards for Mathematics HSA.SSE.B.4. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.
How to use it
- Enter up to four debts. Give each one its balance, its interest rate (APR, the yearly rate) and the monthly payment you make now. Leave unused rows blank.
- Enter the new loan's rate and term (how long it lasts).
- Enter the origination fee as a percent of the loan, or 0 if there isn't one.
- Read the total savings. Then compare the new payment and payoff time with your current ones, and check the table for each debt.
What the inputs mean
- Debt 1 monthly payment
- The fixed amount you pay on this debt each month. For a credit card, use what you actually pay, not a minimum that shrinks as the balance falls.
- Consolidation loan rate (APR)
- The rate on the new loan offer. If the lender quotes an APR that already includes the fee, enter that APR here and set the fee to 0. Otherwise the fee will be counted twice.
- Origination fee
- Many personal loans take the fee out of the money you receive. So the loan is made a bit bigger. That way, after the fee, it still pays off every balance in full.
Formula and method
each current debt: every month, balance = balance × (1 + APR ÷ 100 ÷ 12) − payment, until it reaches 0 current interest = the sum of the interest charged on every debt loan L = total balances ÷ (1 − fee ÷ 100); fee = L − total balances new payment = L × i ÷ (1 − (1 + i)^(−n)), with i = rate ÷ 100 ÷ 12 new cost = new payment × n − L + fee savings = current interest − new cost
In these formulas, APR is each debt's yearly rate and L is the new loan amount. i is the new loan's monthly rate, and n is its number of monthly payments. Each current debt is played forward month by month, at its own rate and payment. So a high-rate card paid slowly and a low-rate loan paid quickly are each priced correctly. The current path ends when the last debt is paid off.
The new loan is a standard fixed-rate loan, paid off in equal monthly amounts. The fee comes out of the loan, so you borrow slightly more than you owe. You pay interest on that extra too.
Savings compares everything you'd pay on top of the balances themselves. That's interest on the current path, against interest plus the fee on the new one.
Worked example
You have three debts. One is $6,500 at 24.9%, paying $200 a month. One is $3,200 at 21.9%, paying $110. The last is $4,800 at 12.5%, paying $160. The offer is a 4-year loan at 11% with a 3% origination fee.
- Total owed: $6,500 + $3,200 + $4,800 = $14,500, with current payments of $470 a month.
- Kept as they are, the debts are paid off in 55, 42 and 37 months. The interest is $4,426.84 + $1,404.12 + $985.33 = $6,816.28.
- Loan needed: $14,500 ÷ (1 − 3%) ≈ $14,948.45, which includes a fee of $448.45.
- New payment: $14,948.45 × 0.00916667 ÷ (1 − 1.00916667^(−48)) ≈ $386.35 a month.
- Cost of the new loan: $386.35 × 48 − $14,948.45 + $448.45 ≈ $4,044.83.
- Savings: $6,816.28 − $4,044.83 ≈ $2,771.46.
Result: Consolidating saves about $2,771.46 after the fee. It lowers the monthly payment by about $83.65. And it makes you debt-free in 4 years instead of 4 years 7 months.
Understanding the result
A positive total saving means the new loan costs less in interest and fees than your current path. A negative one means you'd pay more overall, even if the monthly payment is lower.
If the new payment is lower but the saving is small or negative, you're mostly buying breathing room each month. That can be worth it, but know the price.
If you can afford your current total payment, keep paying that amount on the new loan instead of the minimum. You'd clear it sooner and save even more.
Assumptions and limitations
- Current debts have fixed rates and fixed monthly payments. There are no new charges, fees or rate changes.
- Interest on every debt is charged each month at APR ÷ 12 on the balance. Payments come at the end of each month.
- The new loan has a fixed rate and the same payment every month. Its fee is taken out of the loan money.
- Amounts aren't rounded to the cent. Future dollars are treated the same as today's dollars.
- It doesn't handle credit card minimums that fall as the balance falls, special promotional rates, or balance-transfer fees.
- Running the cards back up after consolidating would undo the savings. The calculator assumes that doesn't happen.
- It can't tell how your credit score would change, or whether you qualify for the offered rate.
Frequently asked questions
Does debt consolidation always save money?
No. It saves when the new rate, fees included, is lower than the rates you pay now, and the loan isn't stretched too long. Try a 10-year term on the sample debts, at 14% with a 5% fee. The payment drops a lot, but the total cost rises.
Why is the loan larger than my balances?
Because many lenders take the origination fee out of the money they send you. To end up with enough to pay every balance, you borrow the balances divided by (1 − the fee rate). On $14,500 with a 3% fee, that's about $14,948.45.
Should I choose a shorter term?
A shorter term raises the payment but cuts interest. A good place to start is a term no longer than your current payments would take. You'll find that under 'Current debts paid off in'.
Is consolidation better than the snowball or avalanche method?
They answer different questions. Consolidation changes the rate you pay. Snowball (smallest balance first) and avalanche (highest rate first) change the order you pay debts off, at the same rates. If you can get a clearly lower rate, consolidation often costs less. Otherwise, paying extra in avalanche order is a free alternative.
How this calculator is checked
Method: Month-by-month amortization of each current debt at APR ÷ 12 with its fixed payment; standard level-payment formula for the consolidation loan, sized as balances ÷ (1 − fee). The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.
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