# Is a debt consolidation loan cheaper?

Compares paying your debts as you do now with one debt consolidation loan: the monthly payment, the total interest and fees, the APR, and the money saved or lost.

- Page: https://www.acalculator.org/finance/debt-consolidation-calculator
- JSON spec: https://www.acalculator.org/finance/debt-consolidation-calculator.json
- Version: 1d26dc310a52

## Default answer

Example with the default inputs (Your debts [Name Card A, Balance $8,000.00, APR 24.99%, Monthly payment $240.00; Name Card B, Balance $4,500.00, APR 21.99%, Monthly payment $135.00; Name Personal loan, Balance $5,000.00, APR 17.5%, Monthly payment $180.00], Consolidation loan rate 11%, Loan term (months) 48, Origination fee 5%, Start date September 30, 2026) on the example date Wednesday, September 30, 2026: A 48-month consolidation loan at 11% costs $476.10 a month and $22,852.88 in all, against $27,268.82 for your current debts.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| debts | Your debts | One row per debt: a name, what you owe, the yearly interest rate (APR), and the monthly payment. |
| rate | Consolidation loan rate | The fixed yearly interest rate of the new loan. The monthly rate is this ÷ 12. |
| months | Loan term (months) | The number of monthly payments on the new loan, for example 36, 48, or 60. |
| fee | Origination fee | A fee taken out of the new loan, as a percent of it. The loan is made larger so the rest still pays off every debt. |
| start | Start date | The day you consolidate. The first payment is one month later. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| saving | Money saved by consolidating | The total you would pay on your current debts minus the total you would pay on the loan; negative when the loan costs more. |
| payment | Loan payment | The monthly payment on the consolidation loan. |
| currentPayment | Current monthly payments | The monthly payments on your debts today, added up. |
| change | Monthly payment change | Your current monthly payments minus the loan payment: positive when the loan payment is lower. |
| owed | Debts paid off | The balances of your debts, added up. |
| amount | Loan amount | The debts paid off plus the origination fee. |
| feeAmount | Origination fee | The fee taken out of the loan. |
| apr | Loan APR | The yearly rate at which the loan payments repay the debts paid off, so the fee counts as a cost. |
| loanInterest | Loan interest | All the interest on the consolidation loan. |
| loanPaid | Total paid on the loan | All the loan payments added up. |
| currentInterest | Interest on current debts | All the interest if you keep paying your debts as you do now. |
| currentPaid | Total paid on current debts | All the payments on your current debts until the last one is gone. |
| currentMonths | Months to pay off current debts | The months until your last current debt is paid off at its payment. |

## Method

Current: each debt pays its own payment monthly, interest = balance × APR ÷ 1200, until it is gone. Loan: L = owed ÷ (1 − fee), payment = L × r ÷ (1 − (1 + r)^−n); saving = current total paid − n × payment.

## Assumptions

- Your current debts keep their rates and monthly payments, with no new charges, and each is paid until it is gone; nothing rolls over.
- The origination fee is taken out of the new loan, so the loan is made larger to pay off every debt in full.
- The new loan has a fixed rate and equal monthly payments made at the end of each month.
- Values are not rounded to the cent between months; only the display is rounded.

## Worked examples

1. debts = {"name":"Card A","balance":8000,"rate":24.99,"payment":240} or {"name":"Card B","balance":4500,"rate":21.99,"payment":135}, rate = 11%, months = 48, fee = 5% gives owed = $17,500.00, amount = $18,421.05, payment = $476.10, apr = 13.759152%, loanPaid = $22,852.88, currentMonths = 58, currentPaid = $27,268.82, saving = $4,415.94, change = $78.90. Source: Consumer Financial Protection Bureau, What do I need to know about consolidating my credit card debt? https://www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-about-consolidating-my-credit-card-debt-en-1861/.
2. debts = {"name":"A","balance":1200,"rate":0,"payment":100} or {"name":"B","balance":2400,"rate":0,"payment":100}, rate = 0%, months = 24, fee = 0% gives payment = $150.00, currentMonths = 24, saving = $0.00, change = $50.00, apr = 0%. Source: Consumer Financial Protection Bureau, What do I need to know about consolidating my credit card debt? https://www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-about-consolidating-my-credit-card-debt-en-1861/.
3. debts = {"name":"Card","balance":10000,"rate":18,"payment":300} or undefined, rate = 16%, months = 60, fee = 8% gives amount = $10,869.57, payment = $264.33, apr = 19.88992%, currentPaid = $13,967.21, saving = -$1,892.39. Source: Consumer Financial Protection Bureau, What do I need to know about consolidating my credit card debt? https://www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-about-consolidating-my-credit-card-debt-en-1861/.

## FAQ

### How does this calculator decide if consolidation saves money?

It adds up everything you would pay if you keep paying each debt as you do now, and everything you would pay on the new loan. The difference is the money saved; when it is negative, consolidating costs more even if the monthly payment is lower.

### Why is the loan bigger than my debts?

Most consolidation loans take an origination fee out of the money they pay out. To pay off $17,500 of debts with a 5% fee, you must borrow $17,500 ÷ 0.95 = $18,421.05. The page sizes the loan that way.

### Why can a lower payment cost more?

A longer term or a fee can outweigh a lower rate. Moving a $10,000 card at 18% paying $300 a month into a 60-month loan at 16% with an 8% fee lowers the payment by $35.67 but costs $1,892.39 more in total.

### What is the APR of the consolidation loan?

The yearly rate at which the loan payments repay the cash you actually get, the debts paid off. It counts the fee, so it is higher than the loan rate whenever there is a fee: 13.76% for the 11% loan with a 5% fee in the example.

### What does the page assume about my current debts?

That you keep paying each one its current monthly payment, with no new charges, until it is gone, and that the rates do not change. It does not roll a paid-off debt’s payment into the others; see the debt payoff calculator for that.

### Is consolidation a good idea if I keep using my cards?

Only if the cards stay paid off. New charges on the cleared cards add new debt on top of the loan, which this comparison does not include.

## Sources

- Consumer Financial Protection Bureau, What do I need to know about consolidating my credit card debt? https://www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-about-consolidating-my-credit-card-debt-en-1861/
- Federal Trade Commission, Consumer Advice: How to get out of debt (debt consolidation loans). https://consumer.ftc.gov/articles/how-get-out-debt
- Regulation Z, 12 CFR 1026 appendix J, Annual percentage rate computations for closed-end credit transactions (actuarial method). https://www.consumerfinance.gov/rules-policy/regulations/1026/j/