$20,000 debt consolidation
Here’s the estimated interest savings consolidating $20,000 from 22% to 10%.
Different balance or rates? Use the debt consolidation calculator above.
About the debt consolidation calculator
Debt consolidation means combining multiple debts — usually high-interest credit card balances — into a single new loan, typically at a lower fixed interest rate and with a defined payoff term. The appeal is straightforward: instead of juggling several minimum payments at rates that can run 20% or higher, you make one payment on one loan, ideally at a meaningfully lower rate.
This calculator takes your total existing balance and runs it through the standard loan amortization formula twice: once at your new consolidation loan's interest rate over your chosen term, and once at your current average interest rate over that same term, so the comparison isn't distorted by different payoff timelines. The difference between the two total-interest figures is the estimated interest savings from consolidating.
That "same term" comparison is a deliberate simplification worth understanding: real credit card minimum payments aren't based on a fixed payoff term at all — they're usually calculated as a small percentage of your outstanding balance (often around 1-3%), which means paying only the minimum on credit cards can stretch payoff out for many years longer than a fixed-term consolidation loan, and would rack up far more interest than this comparison shows if it modeled actual minimum-payment behavior.
In other words, this tool likely understates how much a consolidation loan saves versus making only minimum payments on the original cards, because it compares apples to apples on term length rather than showing the realistic (much slower, much more expensive) minimum-payment path. Its purpose is to isolate the effect of the interest rate change alone, holding the payoff schedule constant.
Before consolidating, also factor in anything this calculator doesn't: origination or balance-transfer fees on the new loan, whether the new rate is fixed or variable, your credit score's effect on the rate you'll actually qualify for, and the discipline required to avoid running the old credit cards back up once they're paid off.
Debt consolidation calculator questions
How consolidating debt at a lower rate affects total interest.
How does debt consolidation save money?
Debt consolidation combines multiple balances — often high-interest credit cards — into one new loan at a lower interest rate. This calculator compares total interest at your old average rate versus your new consolidation rate, over the same loan term, to estimate the savings.
How is interest savings calculated?
This calculator amortizes your total debt balance at your new consolidation rate over your chosen term, then amortizes the same balance at your old average rate over that same term, and subtracts the two total-interest figures to get the estimated savings.
Why does this calculator use the same loan term for both rates?
It's a deliberate simplification to isolate the effect of the rate change. Real credit card minimum payments are usually a percentage of the balance rather than a fixed term, so making only minimum payments on the original cards would typically take much longer and cost more interest than this same-term comparison shows.
What interest rate should I use for my current debt?
Use a weighted average of your existing balances' APRs — for example, if you owe more on a 24% card than a 18% card, your average should be closer to 24%. A rough weighted average is enough for this calculator to give a useful estimate.
Does debt consolidation hurt my credit score?
It can cause a small, temporary dip from the credit inquiry and new account, but consolidating can help your score over time by lowering your credit utilization on revolving cards and by demonstrating consistent, on-time payments on the new loan.
What are the risks of debt consolidation?
The most common risk is running the original credit cards back up after they're paid off, ending up with both the old balances and the new consolidation loan. Origination fees, balance transfer fees, and variable interest rates on the new loan can also reduce or eliminate the expected savings.