Debt Consolidation Calculator

What is Debt Consolidation?

Debt consolidation combines multiple debts into a single loan, ideally with a lower interest rate. This simplifies payments and can reduce total interest paid.

Consolidation Options

• Personal Loan: Fixed rate and term, predictable payments
• Balance Transfer Card: 0% intro APR, but watch for fees and expiration
• Home Equity Loan: Lower rates but your home is collateral
• 401(k) Loan: Borrow from yourself, but risky if you leave job

When Consolidation Makes Sense

• New rate is significantly lower than current weighted average
• You can qualify for a good rate (credit score 670+)
• You will not rack up new debt on paid-off cards
• Monthly payment fits your budget

When to Avoid Consolidation

• The new rate is not much lower
• Fees eat up the savings
• Extending term means paying more total interest
• You might continue spending on credit

The Trap to Avoid

Many people consolidate, then run up their credit cards again. This doubles the problem. Cut up cards or lock them away after consolidating.

Tips for Success

• Shop rates from multiple lenders
• Check for prepayment penalties
• Factor in all fees
• Automate payments
• Close or freeze paid-off cards