Calculate if debt consolidation saves you money. Compare multiple credit cards and loans vs a single consolidation loan. See monthly savings, total interest savings, and payoff time reduction. Free calculator with detailed analysis.
Total debt: $19,500
Personal loans: 6-36%
Common: 36, 48, 60, 72 months
Debt consolidation combines multiple debts into a single loan with one monthly payment. The goal is to get a lower interest rate, reduce monthly payments, or simplify your finances.
Consolidation works best when you can get a lower interest rate than your current debts, have good credit (700+), and need to simplify multiple payments into one manageable payment.
Options include personal loans (6-36% APR), balance transfer cards (0-29% APR), home equity loans (7-9% APR), or debt management plans through credit counseling.
Consolidation doesn't eliminate debt — it restructures it. Success requires discipline to avoid accumulating new debt on cleared credit cards. Create a budget and stick to it.
| Option | Rate Range | Best For |
|---|---|---|
Personal Loan ✓ Fixed rate, predictable payments, no collateral ✗ Higher rates for poor credit, origination fees | 6-36% APR | Good credit, want fixed payments |
Balance Transfer Card ✓ 0% intro rates, no origination fees ✗ Intro rate expires, balance transfer fees | 0-29% APR | Excellent credit, can pay off in 12-21 months |
Home Equity Loan ✓ Low rates, tax-deductible interest ✗ Home as collateral, closing costs | 7-9% APR | Homeowners with equity, large debt amounts |
HELOC ✓ Flexible access, low rates, interest-only payments ✗ Variable rates, home as collateral | 7-10% APR | Ongoing expenses, uncertain amounts |
401(k) Loan ✓ Low rates, pay interest to yourself ✗ Risk retirement savings, job loss risk | 4-6% APR | Last resort, stable employment |
Debt consolidation is a financial strategy that combines multiple debts into a single loan with one monthly payment. Instead of juggling several credit card payments, personal loans, and other debts with different due dates and interest rates, you take out one new loan to pay them all off.
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A person with $19,500 in credit card debt at 22% APR consolidates with a personal loan at 12% APR for 5 years.
Saved every month
Total savings: $9,360 over 5 years. Payoff time reduced by 8 months.