Debt Consolidation Calculator

Debt consolidation is the process of combining several debts into one new loan. The goal is to streamline payments, lower interest, and pay off debt more quickly. Bankrate’s debt consolidation calculator is designed to help you determine if debt consolidation is the right move for you. 

Fill in your outstanding loan amounts, credit card balances and other debts to see what your monthly payment could look like. Try adjusting the terms, loan types or rate until you find a debt consolidation plan that fits your goals and budget.

5 ways to consolidate debt

Once you run the numbers, choose a method to consolidate your debt. There are pros and cons to each option and, as always, you’ll want to shop around for financial products to ensure you’re getting the best rate and terms.

Remember that debt consolidation is not for everyone. You should only consolidate your debt if you qualify for a lower interest rate than you are currently paying. It is also important to note that only some types of debt can be consolidated. 

1. Personal loans

A personal loan is an unsecured loan that, unlike a credit card, has equal monthly payments. Loan amounts vary with credit score and history, but generally top out at $100,000. While banks and credit unions offer personal loans, subprime lenders are also very active in this market, so shop carefully and compare rates, terms and fees between three or more lenders.

Because a personal loan is unsecured, there are no assets at risk, making it a good option for a debt consolidation loan. However, be aware that a large loan with a low APR requires good credit. Check out top personal loans for debt consolidation and compare lenders to find the best personal loan rate for you.

2. Home equity loans or lines of credit

As a homeowner, you can use the equity in your home to consolidate your debt. Because home equity loans and lines of credit (HELOCs) have lower interest rates, they may cost less than a personal loan or balance transfer credit card. However, taking a long time to pay off your loan could mean paying more in interest.

Home equity loans can also be a risky method of debt consolidation. If you fail to repay the loan, you could lose your house to foreclosure. 

3. Credit card balance transfers

Transferring your debt to one credit card, known as a credit card balance transfer, could help you save money on interest. The card will need a limit high enough to accommodate your balances and an annual percentage rate (APR) low enough to make consolidation worthwhile.

Getting an unsecured card ensures you won’t risk any assets. Before applying, ask about balance transfer limits and fees. Also, you generally won’t learn the APR or credit limit until after and unless you’re approved. 

Using one credit card as the repository for all your card debt is fighting fire with fire, so be cautious if this is your plan for debt consolidation. Once you’ve transferred debts to one card, focus on paying that card down as fast as possible — and avoid wracking up additional debt on your other cards.

4. Savings or retirement accounts

• Savings account: You can use your savings to pay off all or a portion of your debt. But it may not be the best choice. If you borrow from savings, you may be left without an emergency fund to cover unexpected expenses in the future. 
• 401(k): Many 401(k) plans will let you borrow against your retirement savings at a relatively low interest rate. But if you quit your job or get fired, the entire 401(k) loan becomes due immediately. Even if you are secure in your job, there is a 10 percent penalty added if you fail to repay and you’re under age 59.5. 
• Roth Individual Retirement Account: There’s no penalty for borrowing what you’ve deposited in your Roth IRA, but you’ll want to be sure that consolidating debt outweighs the lost principal and compound interest.

5. Debt management plans

If you want debt consolidation options that don’t require taking out a loan, applying for a new card or tapping into savings or retirement accounts, a debt management plan may be worth considering. With a debt management plan, you’ll work with a nonprofit credit counseling agency to negotiate with creditors and draft a plan to pay off your debts.

You close all credit card accounts and make one monthly payment to the agency, which pays the creditors. You still receive all billing statements from your creditors, so it’s easy to track how fast your debt is being paid off. 

Some agencies may work for low or no cost if you’re struggling with your finances. Stick with nonprofit agencies affiliated with the National Foundation for Credit Counseling or the Financial Counseling Association of America, and make sure your debt counselor is certified via the Council on Accreditation.

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