How it works
A consolidation loan pays off your cards in one go, and you repay the loan in fixed monthly payments for a set term. It saves money when the loan's APR is well below your cards' and the term isn't so long that the interest catches up. The calculator compares two paths from today: keep paying what you pay now until the cards are clear, or take the loan.
Origination fees are usually taken out of the loan, not paid up front. To clear $15,000 with a 5% fee you borrow $15,789, so the fee costs $789 and you pay interest on it too.
Worked example
You owe $15,000 on cards at 22% APR and pay $450 a month. At that pace you're debt-free in 4 years 4 months and pay $8,394 of interest.
An 11% loan over 36 months with a 5% fee costs $516.93 a month and $3,609 in interest and fees, so consolidating saves $4,785 and clears the debt in 3 years. With no fee it would save $5,715; stretched to 60 months, the payment drops to $343.30 but the saving shrinks to $2,796.
Things to know
- Fix the cause first. The CFPB's advice: if the debt came from spending more than you earn, a loan won't help unless that changes. Keep the cleared cards at zero.
- Compare APRs, not rates. The APR includes most fees. Checking your rate is usually a soft credit check; applying is a hard one.
- Consolidation is not debt settlement. A consolidation loan repays everything you owe. Debt settlement (debt relief) negotiates to pay less than you owe, charges fees, and can hurt your credit for years.
- A free alternative: a nonprofit credit counselor can set up a debt management plan, often with lower card rates and no new loan.
Questions people ask
Does consolidating hurt my credit score?
Applying adds a hard inquiry and a new account, which can lower your score a little for a while. Paying off the cards lowers how much of your credit you use, which usually helps. Missing loan payments is what really hurts.
What APR will I get?
It depends mostly on your credit score and income. Personal loan rates run well below average card rates for good credit, but can be close to card rates for fair or poor credit, in which case consolidating may not save anything. Get a few quotes.
What if my payment doesn't even cover the interest?
Then the cards never get paid off at that payment, and the calculator says so. A fixed-term loan at least ends on a set date. See also the credit card payoff calculator and the debt payoff planner for snowball and avalanche plans.
Sources
- Consumer Financial Protection Bureau: what to know before consolidating credit card debt
- Consumer Financial Protection Bureau: credit counseling, debt settlement, debt consolidation and credit repair compared
- Federal Reserve: consumer credit (G.19), average credit card and personal loan rates
Reviewed September 29, 2026 by The Dollars World team. How we build and check our calculators · Our data and formulas. This is general information, not financial advice.