Debt Consolidation Calculator

The monthly payment is the wrong comparison

Consolidation offers are advertised on the payment, and the payment can always be made smaller by making the term longer. A rate that drops from 23% to 12% sounds decisive, but if the term stretches from three years to six the total interest can still rise. The two figures above — interest on the current path and interest plus fee on the new loan — are the honest comparison, and the verdict line states which way it actually falls for your numbers.

The fee is financed, so you borrow more than you owe

Origination fees on consolidation loans typically run 1% to 8% and are almost always deducted from the advance, which means the loan is written for more than your debts. You then pay interest on the fee for the whole term. The amount financed above shows the real principal; the quoted rate applies to that larger figure, not to the debt you started with.

A blended rate is weighted by balance

Averaging 22.9%, 18.5% and 26.9% gives 22.8%, which is not your cost of borrowing. A small balance at a punishing rate moves the total far less than a large balance at a middling one. The blended figure above weights each rate by its balance, which is the number a consolidation offer has to beat.

When a payment never clears the debt

If a payment is at or below the monthly interest on that balance, the debt does not shrink and there is no payoff date at all. This page reports that as "never" rather than inventing a large number of months, because the two mean different things: one is a slow repayment, the other is a balance that grows for as long as you keep paying. Minimum payments on credit cards sit close to this line by design. Where that happens, the comparison above changes shape — any fixed-term loan ends a debt that otherwise does not end.

What the arithmetic cannot tell you

Consolidation works when the cards go to zero and stay there. The common failure is not a miscalculation — it is running the balances back up while the loan is still outstanding, which leaves both. And an offer secured on your home carries a lower rate precisely because the consequence of missing payments changed from a damaged credit file to losing the house. That is a real difference in risk, and no calculator can price it for you.

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