Debt Consolidation Calculator - NerdWallet (2024)

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The debt consolidation calculator below can help you decide if consolidation is right for you. The calculator will suggest the best way to consolidate your debt and estimate your savings with a debt consolidation loan.

You can also see our picks for the best debt consolidation loans.

Debt consolidation calculator

How to use the debt consolidation calculator

Step 1: Enter the balances, interest rates and monthly payments you currently make toward your unsecured debts, like credit cards, personal loans and payday loans.

Don't include secured debts like car loans or low-rate student loans here. There are better ways to manage those debts. (Learn more about auto refinancing and student loan refinance options.)

Click "I'm done" and look at the calculator results, based on the figures you entered:

  • Total balance: The sum of all your debts, or what you owe in total.

  • Combined interest rate: Your average weighted interest rate for all the debts you put in the calculator.

  • Total monthly payment: The amount you're paying monthly toward these debts, including interest.

  • When you'll be debt-free: The amount of time until you are debt-free, based on your current balance and monthly payments.

Step 2: Choose your credit score range to see your debt consolidation options. Depending on the size of your debt and credit score, a balance transfer card or debt consolidation loan may be a good fit.

If you’re interested in a consolidation loan, drag the sliders below the table to enter an estimated rate and the repayment term you want (in years) for the new loan.

Step 3: Look at the comparison between your current debts and the new debt consolidation loan.

Debt consolidation makes the most sense when your new total payment is less than your current total payment, and you save money on interest.

Want to consolidate your credit card bills? See if you pre-qualify

Just answer a few questions to get personalized results from our lending partners.

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What is debt consolidation?

Debt consolidation rolls your existing debts into one, ideally with a lower interest rate and shorter payoff time, saving you money and time until payoff. This is often accomplished with a debt consolidation loan, but there are other ways to consolidate debt depending on your specific situation.

Ways to consolidate debt

  1. Debt consolidation loan: These loans, usually from an online lender, credit union or bank, provide a large amount of money to pay off multiple debts, leaving you with one monthly debt payment.

  2. Balance transfer credit card: This option transfers credit card debt to a credit card that charges no interest for a promotional period, typically 15 to 21 months.

  3. Home equity loan: If you own your home, you may be able to get a loan based on the equity in your home to pay off your other debts, but you risk losing your home if you don’t keep up with payments.

  4. Retirement account loan: If you have a savings or employer-sponsored retirement account, you could take out some of that money to pay off your debts. The downsides are less funds for your retirement, and if you can’t repay the loan, you’ll owe penalties and taxes.

  5. Debt management plan: This option combines several debts into a single monthly payment at a lower interest rate than most credit cards or loans, but it typically includes startup and monthly fees, and it often takes three to five years to repay the debt.

Weighing the pros and cons of debt consolidation

If you’re not sure whether debt consolidation is right for you, consider the benefits and risks to consolidating your debts.

Pros of debt consolidation

Cons of debt consolidation

  • You pay less in interest.

  • You may get out of debt faster.

  • You have only one payment.

  • You have a clear finish line.

  • You may not qualify for a low enough rate.

  • You still have debt you need to manage.

  • Consolidation won’t fix core spending issues.

Pros of debt consolidation

You pay less in interest: If you consolidate with a product that has a lower interest rate than your credit cards or other debts, you’ll save money on interest. This can make getting out of debt easier.

You may get out of debt faster: Since you’re paying less interest, you could potentially apply those savings to your debt repayment and get out of debt even faster.

You have only one payment: Instead of juggling multiple debt repayments, consolidating your debts means you only have to worry about making one payment. This can help you avoid late fees or additional interest.

You have a clear finish line: Paying off debt is challenging, but with consolidation, you have a clear plan and a finish line to work toward. As long as you make your payments on time, you’ll know when you’ll be out of debt for good.

Cons of debt consolidation

You may not qualify for a low enough rate: Depending on your credit score, you may not be able to qualify for a lower interest rate than your current debts, in which case, consolidation may not be the best option.

You still have debt you need to manage: Debt consolidation doesn’t mean you’re debt-free. You still have to manage payments for your new loan, balance-transfer card or other consolidation product.

Consolidation won’t fix core spending issues: If you struggle with chronic overspending, especially with credit cards, consolidation may make things worse since it frees up your credit cards to be used again.

Which lender is right for me?

NerdWallet has reviewed more than 35 lenders to help you choose one that’s right for you. Below is a list of lenders that offer standout debt consolidation loans.

Personal loans from our partners

Check Rate

on Avant

Avant

4.0

NerdWallet rating

Debt Consolidation Calculator - NerdWallet (4)

4.0

NerdWallet rating

APR

9.95-35.99%

Loan amount

$2,000 - $35,000

Check Rate

on Avant

Check Rate

on Best Egg

Best Egg

4.5

NerdWallet rating

Debt Consolidation Calculator - NerdWallet (6)

4.5

NerdWallet rating

APR

8.99-35.99%

Loan amount

$2,000 - $50,000

Check Rate

on Best Egg

Check Rate

on Citibank

Citibank

4.5

NerdWallet rating

Debt Consolidation Calculator - NerdWallet (8)

4.5

NerdWallet rating

APR

10.49-19.49%

Loan amount

$2,000 - $30,000

Check Rate

on Citibank

Check Rate

on Discover

Discover

5.0

NerdWallet rating

Debt Consolidation Calculator - NerdWallet (10)

5.0

NerdWallet rating

APR

7.99-24.99%

Loan amount

$2,500 - $40,000

Check Rate

on Discover

MORE DEBT CONSOLIDATION LOANS

Debt consolidation options for bad credit

If you have bad credit (a 620 credit score or lower), you can still consolidate your debts.

Consolidation loans from credit unions and online lenders are probably your best bet, since both may look more favorably on bad-credit applicants. Visit your local credit union and ask about their debt consolidation options. By becoming a credit union member, which is usually quick and affordable, you may be able to apply for a consolidation loan at a low rate.

Debt consolidation loans for bad credit are also available from online lenders. These loans have terms ranging from two to seven years, and amounts can be high as $50,000.

If you can’t qualify for a debt consolidation product that has a low enough interest rate, debt payoff options like the debt snowball and debt avalanche methods may be smart alternatives. These DIY strategies can be extremely effective and don’t require you to apply for credit.

However you make progress on your debts, paying down what you owe can help your score and make it easier to qualify for affordable credit in the future.

Frequently asked questions

Can I consolidate all my debts into one payment?

You can consolidate all your debts into one payment using a balance transfer card or a debt consolidation loan.

» MORE: Balance transfer card vs. debt consolidation loan: Which is right for you?

Do debt consolidation loans hurt my credit score?

You may see a temporary dip in your credit scores after applying for a debt consolidation loan because lenders require a hard credit pull. However, your credit scores should rebound if you make on-time payments and avoid running up new debt.

» MORE: How does a debt consolidation loan work?

What is the average interest rate on a debt consolidation loan?

Interest rates on mainstream debt consolidation loans typically range from 6% to 36%. You must have strong credit to qualify for rates at the low end of that range.

» MORE: Current debt consolidation loan interest rates

Can I use my credit cards after debt consolidation?

You can use your credit cards after debt consolidation; however, it’s best to use them sparingly and pay off balances in full to avoid paying interest and running up more debt.

» MORE: 5 ways to consolidate credit card debt

Introduction

I am an expert and enthusiast-based assistant. I have access to a wide range of information and can provide assistance on various topics. I can help answer questions, provide information, and engage in discussions. Now, let's dive into the concepts mentioned in the article you provided.

Debt Consolidation

Debt consolidation is a strategy that combines multiple debts into one, typically with a lower interest rate and a shorter payoff time. The goal is to save money and time until the debts are fully paid off. There are several ways to consolidate debt, depending on your specific situation.

Ways to Consolidate Debt

  1. Debt Consolidation Loan: This type of loan, usually offered by online lenders, credit unions, or banks, provides a lump sum of money to pay off multiple debts. With a debt consolidation loan, you'll have one monthly payment instead of multiple payments.

  2. Balance Transfer Credit Card: This option involves transferring credit card debt to a card that offers a promotional period with no interest. This can provide temporary relief from high-interest rates, typically lasting 15 to 21 months.

  3. Home Equity Loan: If you own a home, you may be able to use the equity in your home to obtain a loan to pay off your other debts. However, it's important to note that if you fail to make payments, you risk losing your home.

  4. Retirement Account Loan: If you have a savings or employer-sponsored retirement account, you may have the option to borrow from that account to pay off your debts. However, this approach comes with downsides, such as reducing your retirement funds and potential penalties and taxes if the loan is not repaid.

  5. Debt Management Plan: This option involves combining multiple debts into a single monthly payment with a lower interest rate than most credit cards or loans. However, it often includes startup and monthly fees, and it may take three to five years to fully repay the debt.

Pros and Cons of Debt Consolidation

When considering debt consolidation, it's important to weigh the pros and cons:

Pros of Debt Consolidation:

  • You pay less in interest.
  • You may get out of debt faster.
  • You have only one payment.
  • You have a clear finish line.

Cons of Debt Consolidation:

  • You may not qualify for a low enough interest rate.
  • You still have debt that needs to be managed.
  • Consolidation won't fix core spending issues.

Choosing a Lender

If you're considering a debt consolidation loan, it's important to choose the right lender. NerdWallet has reviewed more than 35 lenders and provided a list of standout debt consolidation loans. Some of the lenders mentioned in the article include SoFi, Avant, Best Egg, Citibank, and Discover.

Debt Consolidation Options for Bad Credit

Even if you have bad credit (a credit score of 620 or lower), you can still consolidate your debts. Credit unions and online lenders may be more favorable to bad-credit applicants. It's worth visiting your local credit union to inquire about their debt consolidation options. Online lenders also offer debt consolidation loans for bad credit, with terms ranging from two to seven years and loan amounts as high as $50,000. If you can't qualify for a debt consolidation loan with a low interest rate, alternative debt payoff options like the debt snowball and debt avalanche methods may be worth considering.

Frequently Asked Questions

  1. Can I consolidate all my debts into one payment?

    • Yes, you can consolidate all your debts into one payment using a balance transfer card or a debt consolidation loan.
  2. Do debt consolidation loans hurt my credit score?

    • Applying for a debt consolidation loan may result in a temporary dip in your credit scores due to the hard credit pull. However, if you make on-time payments and avoid accumulating new debt, your credit scores should rebound.
  3. What is the average interest rate on a debt consolidation loan?

    • Interest rates on mainstream debt consolidation loans typically range from 6% to 36%. To qualify for the lower end of that range, you generally need a strong credit score.
  4. Can I use my credit cards after debt consolidation?

    • Yes, you can still use your credit cards after debt consolidation. However, it's advisable to use them sparingly and pay off the balances in full to avoid accruing interest and accumulating more debt.

I hope this information helps you understand the concept of debt consolidation and the various options available. If you have any further questions, feel free to ask!

Debt Consolidation Calculator - NerdWallet (2024)
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