Debt Consolidation Calculator

Consolidating debt at a lower average interest rate reduces overall interest expenses and simplifies monthly payments into one.

Only if the new rate is genuinely lower and you do not extend the term so far that total interest rises. Consolidating five cards at 22% into a personal loan at 11% is a real saving. Consolidating into a longer loan at a similar rate lowers the monthly payment while increasing the total paid - which feels like progress and is not.

You convert unsecured debt into debt secured against your home. The rate is lower because the lender can foreclose. If the underlying spending pattern has not changed, you risk running the cards back up while now also carrying a lien on the property. The rate saving is real; so is the downside.

There is usually a small short-term dip from the hard inquiry and the new account lowering average account age. Over time, a lower credit utilisation ratio and a consistent payment record typically improve the score. Closing the old cards after consolidating reduces available credit and can push utilisation up, so it often helps to leave them open and unused.