What consolidation really does
Debt consolidation replaces several debts — often high-rate credit cards — with a single new loan, ideally at a lower rate. The appeal is real: one payment instead of many, a lower interest rate, and often a lower monthly payment. But two traps hide in the details, and this calculator exposes both: the term and the fee.
The lower-payment illusion
A consolidation loan often lowers your monthly payment mainly by stretching the term. A lower rate spread over more years can still cost more total interest than your current debts would. Always compare total interest, not just the monthly payment — a smaller payment for twice as long is frequently a worse deal dressed up as relief. The calculator shows both numbers side by side so you can't be fooled.
When consolidation genuinely wins
- The rate drop is large (e.g. from 19% cards to an 11% personal loan) and the term isn't dramatically longer.
- Fees are modest. Balance-transfer or origination fees (often 3–5%) eat into savings — the calculator lets you include them.
- You stop adding new debt. Consolidation only works if you don't run the cards back up. Otherwise you end up with the loan and new card balances — the most common way consolidation backfires.
Alternatives to weigh
Before consolidating, compare a structured payoff plan (avalanche/snowball) on your existing debts, and a 0% balance-transfer card if you can clear the balance within the promo window. Consolidation is a tool, not a cure — the behavior that created the debt matters more than the loan that refinances it.