Debt consolidation calculator
Compare your current minimum-payment strategy with a single consolidation loan.
Calculator loansLogic updated April 2026
This calculator compares paying down your existing debts at their current minimum payments against rolling them into a single consolidation loan. Consolidation usually wins on cost when the new rate is below your blended existing rate and the new term isn't significantly longer — but it's not automatic, and the calculator surfaces exactly when it pays off and when it doesn't.
How this is calculated
Formula
Existing path: each debt amortised monthly with its minimum payment. Consolidation path: standard amortisation. Break-even = first month consolidation cumulative payments exceed existing cumulative payments.Step-by-step
- For each existing debt, simulate the balance month-by-month — accrue interest, deduct the minimum payment, repeat until the balance reaches zero
- Sum interest and total payments across all existing debts to get the existing-plan cost
- For the consolidation loan, calculate the monthly payment using standard amortisation on the combined balance, the new rate, and the new term
- Track cumulative payments under each plan month-by-month — the break-even month is the first month consolidation total catches up to the existing total
- Subtract the consolidation total cost from the existing total cost to derive interest savings
- If a debt's minimum payment doesn't exceed the first month's interest, the simulation reports it as a dead end with a recovery suggestion
- Rounding mode
- ROUND_HALF_UP
- Precision
- 20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
- Logic last reviewed
Assumptions & limitations
What this calculator assumes
- Each existing debt continues with its stated minimum payment every month
- Consolidation loan uses monthly repayments
- All rates are fixed for the duration of the analysis
- Consolidation replaces existing debts — no early payout fees modelled
- Simulation is capped at 600 months (50 years) to bound analysis
What this calculator doesn’t account for
- Does not include consolidation loan establishment fees in the comparison
- Does not model balance-transfer credit card promotional rates
- Does not account for credit-score impact of opening a new loan or closing accounts
- Does not factor in tax effects when any of the existing debts are tax-deductible
- Does not include early-payout penalties on the existing debts
Worked example
A borrower has three debts — a $15,000 credit card at 22%, a $5,000 store card at 24%, and a $10,000 personal loan at 12% — and is offered a consolidation loan at 10% over 5 years.
| Input | Value |
|---|---|
| Credit card | $15,000 @ 22%, $400/month minimum |
| Store card | $5,000 @ 24%, $150/month minimum |
| Personal loan | $10,000 @ 12%, $250/month minimum |
| Consolidation loan | $30,000 @ 10% over 5 years |
Consolidation saves ~$8,500 in interest and clears the debts ~14 months earlier
Under the existing plan, the high-rate cards drag out total payoff and accrue heavy interest. Consolidating them at 10% over a defined 5-year term forces the debts to extinguish — every payment includes principal, not just interest. The break-even arrives in the early months because consolidation's monthly payment is similar to the combined existing minimums but each dollar reduces the balance faster.
Frequently asked questions
When does consolidation save money?
When the consolidation rate is meaningfully below the blended rate of your existing debts and the new term is similar to or shorter than the time it would have taken to pay them off. The biggest wins come from consolidating high-rate revolving debt (credit cards, store cards) into a fixed-term loan — converting open-ended interest into a definite payoff date.
What are the risks of consolidation?
Three big ones: extending the term to lower the monthly payment, which can increase total interest; running the consolidated cards back up while still paying off the loan, doubling your debt; and consolidating tax-deductible debt into non-deductible debt or vice versa. The new lower payment is only a saving if you don't refill the credit lines you just paid off.
Should I consolidate credit card debt?
If you have a clear repayment plan and won't restock the cards, yes — credit card rates are usually 2–4× a personal loan rate and the open-ended structure means small balances can persist for decades. The fixed-term discipline of a consolidation loan often clears the debt faster than the cards' minimum payment cycles ever would.
Does consolidation hurt my credit score?
Short-term effects are usually small and mixed: a credit enquiry and a new account can ding the score, while paying down high credit card utilisation can help it. Long-term, finishing a consolidation loan on schedule typically improves the score more than carrying revolving debt at high utilisation. This calculator doesn't model credit-score impact.
What if my minimum payment doesn't cover the interest?
If the minimum payment is less than the first month's interest, the balance grows and the debt never reaches zero. The calculator detects this and recommends a minimum viable payment that just exceeds the first interest charge — that's the floor below which any payoff plan, with or without consolidation, is mathematically broken.
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