One payment, one rate. See if it really saves you money.
List your current debts, then roll them into a single consolidation loan. This tool shows your new monthly payment, how it compares to what you pay now, and the honest bottom line: whether a lower rate over a longer term actually costs you less, or more, in total interest.
Your current debts
Does consolidating actually help?
Current debts vs the consolidation loan
Total interest you would pay
How the balance falls to zero
The bottom line
Each debt, folded into one loan
Every debt takes a share of the consolidation loan in proportion to its balance. The right side shows what that share costs inside the new loan.
| Debt | Balance | Current APR | Current min /mo | Share of loan | New payment /mo |
|---|
Debt consolidation, explained
How Debt Consolidation Works
Debt consolidation combines multiple debts into a single loan with one monthly payment, ideally at a lower interest rate than your existing debts. You take out a new loan to pay off credit cards, medical bills, or other high-interest obligations, simplifying your finances into one predictable payment. The goal is to reduce your overall interest costs and pay off your debt faster with a structured repayment timeline.
Debt Consolidation Loan vs Balance Transfer
A debt consolidation loan provides a lump sum to pay off existing debts and typically carries a fixed interest rate for the full repayment term. Balance transfer credit cards offer introductory 0% APR periods lasting 12 to 21 months, but rates jump to 18% to 28% afterward. A consolidation loan is better for larger amounts that cannot be paid off within a promotional period, while balance transfers work best for smaller debts you can eliminate before the introductory rate expires.
When Debt Consolidation Saves You Money
Debt consolidation saves money when the new loan rate is meaningfully lower than the weighted average rate of your existing debts. For example, replacing three credit cards averaging 24% APR with a personal loan at 10% can save thousands in interest over a three to five year repayment period. The savings are greatest when you maintain the same or shorter repayment timeline and avoid accumulating new debt on the cards you just paid off.
Risks and Pitfalls of Debt Consolidation
The biggest risk of debt consolidation is running up new balances on newly cleared credit cards, which can leave you in a worse financial position than before. Extending your repayment term to get lower monthly payments may result in paying more total interest even at a lower rate. Some consolidation loans charge origination fees of 1% to 8%, and secured consolidation loans that use your home as collateral put your property at risk if you cannot keep up with payments.
Common questions
What is debt consolidation?
Debt consolidation combines multiple debts (credit cards, personal loans, etc.) into a single loan with one monthly payment, ideally at a lower interest rate. This simplifies your finances and can save thousands in interest over time.
How much can I save by consolidating debt?
Savings depend on the rate difference and your balance. Consolidating $25,000 from 22% APR credit cards to a 10.5% personal loan can save $5,000-$10,000 in interest, depending on your payoff timeline.
Does debt consolidation hurt my credit score?
Initially, a hard inquiry and new account may lower your score by a few points. However, consolidation often improves your score over time by reducing credit utilization and establishing a consistent payment history.
What are the requirements for a debt consolidation loan?
Most lenders require a credit score of 580+ (620+ for the best rates), a stable income, and a debt-to-income ratio below 50%. Better credit scores get significantly lower rates, which increases your savings from consolidation.
Estimates for planning only. Your current-debt payoff assumes you keep paying the same fixed minimum on each account with no new charges. Real offers depend on your credit, the exact APR, origination fees and term. Confirm every figure with the lender before you sign.