Save Money by Consolidating Your Debts

Debt Consolidation Calculator

When companies advertises that they can "save you money," what they are usually referring to is simply a reduction in your total monthly payments -- not a savings in the cost of paying off your debt in full. By consolidating your payments into a single loan, you might be paying one monthly payment that is smaller than the sum of the other monthly payments, but if they stretch out your term for a longer period of time you could actually end up paying more interest. This calculator will help you to determine whether or not consolidating will actually reduce the cost of retiring your debts.

Starting with the first line of entry fields, enter each of your obligations, along with their corresponding principal balances, APR and monthly payment amounts (the last two columns are automatically filled in by the calculator). Once you have entered everything you wish to consolidate, click on the "Calculate Current Debts" button. Next, enter the consolidated loan's rate, term and any origination fees that might apply and click the "Figure Consolidating Costs" button. This calculator is primarily for personal loans or HELOCs. If you are consolidating a first mortgage with a second mortgage we also offer a mortgage consolidation calculator.

IMPORTANT: In order for the this calculator to work, each obligation must have the four left-hand fields filled in (for interest-free debts enter .001 just to satisfy the APR entry requirement).

How Much Could You Save by Consolidating Your Debts?

For your convenience we publish current personal loan rates, HELOC & home equity loan rates & Fairfield mortgage refinance rates which you can use to estimate your payments and find a local lender.

Entry Columns Calculated Columns
# Payment
Consolidated Loan Terms Details
Annual Interest Rate (APR): (Get Current Rates)
Borrowing Term (Years):
Enter Any Financing Fees:
Your Results As Is Consolidated Difference
Total of Monthly Payment(s):
Months until paid off:
Total Cost (interest and fees):

Current Personal Loan Rates

Current Fairfield Mortgage Rates

The following table shows current Fairfield 30-year mortgage rates. You can use the menus to select other loan durations, alter the loan amount, change your down payment, or change your location. More features are available in the advanced drop down.

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Everything You Need to Know Before Consolidating

Debt consolidation allows people who are struggling with their finances to group their obligations into a single payment. By consolidating your many obligations into a single one, you can often lower your interest rate and end up with a lower monthly payment. Many people find managing a single payment easier than juggling several different bills month after month.

Consolidation is not a magic bullet that gets you out of hot water or causes your creditors to disappear. It's a financial tool that can be used judiciously to give financially strapped borrowers a little breathing room.

Who is Consolidation Good For?

Anyone who has taken out several different loans from separate lenders that is having trouble paying their bills each month will benefit from a well-designed consolidation plan. Obviously, if you keep incurring late fees and penalties as you scurry to make ends meet every month, you need a better plan.

For example, if you're carrying balances on three different credit cards with interest rates of 10% , 15%, and 22% respectively, you may be able to combine those three cards into one payment with an interest rate of about 12%. A simple grouping could save you thousands every year and ease the pressure on your budget.

Similarly, consolidating can make your budget more manageable by lowering your minimum monthly payment. In the example above, let's say the three cards required minimum monthly payments of $129, $106, and $92. That’s a total monthly outlay of $327 at a minimum - ouch! By consolidating, you may be able to replace your three monthly bills with one payment carrying a minimum monthly obligation of about $225 - $250. As you can see, this is considerably less daunting.

However, this financial breathing room comes with a price. A lower monthly payment means you'll be paying more interest in the long run. In other words, you'll owe money longer and make your lender rich in the process.

Who Should Consider Consolidation?

Consolidation should only be used for its intended purpose - to reduce the total amount of your debt in a controlled environment. It should never be used as a Magic Slate solution to "lift" your obligations off the page. So don’t think that you can start racking up new debts.

If you consolidate and you spend money like a drunken fool, you might as well put a couple of oars on your credit card because you're paddling straight into the perfect storm. You'll be underwater in a matter of months.

For those who are serious about getting out of debt, consolidating will be a great help if :

  • At the moment, you have high APR obligations and you would like to have a lower rate that applies to all of your obligations. Some credit cards soak you with APRs exceeding 25 percent. If you find yourself in this situation, you may soon realize that trying to pay down on an extremely high rate is a losing battle. Consolidation is a great option to lock in a lower APR.
  • You are being strangled by the sum of your minimum monthly payments and you'd welcome the relief of lower monthly payments. People who have a lot of debt typically also have high minimum monthly payments, often more than they can afford. This begets a vicious cycle where you start missing payments, leading to higher rates and painting yourself into a financial corner with no escape. Consolidating can lower your minimum monthly payment, which will help you stay above water and see some light at the end of the tunnel.
  • You are overwhelmed by the paperwork and accounting you need to do to organize the barrage of different bills and statements every month. Let's see, the car note and insurance are due on the 4th and the 7th respectively, your Visa bill is due on the 9th, condo fees on the 15th, the utility company will be cutting off your power if you don't pay up by the 17th - or was it the 7th? It's easy to get confused, especially if you tend to keep due dates in your head. By consolidating into one monthly bill, you'll simplify your life and be able to concentrate on getting out of debt.

People with good credit scores have access to lower interest funding options.

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What Consolidation Options Are Available?

There is no single program or agenda for consolidating debt. But there are myriad financial options to help you reduce the strain on your budget and group your obligations together into one umbrella payment. Choosing the right option for the right reason will make you fiscally responsible and put you on the road to debt-free independence; choosing the wrong option may leave you shirtless.

Debt Consolidation Services

There are a lot of companies looking to help you stay afloat, so be sure to compare them side-by-side and point-by-point.

A debt consolidation company will pay off all your outstanding debts, and you will no longer owe your creditors any money. Instead, you will owe that company an amount that equals all of your previous obligations, which you can pay in one simple monthly payment. The lower the APR you can find for this option, the more appealing it is.

But there are pitfalls and drawbacks to simplifying your finances this way. Once you have signed on to the agreement, there is no backtracking. As you can imagine, this helpful service is not free. In addition to principal and interest payments, there are fees, and these can eat you alive if you have less-than-perfect credit.

In some cases it might make sense to negotiate debt settlement on some specific debts before considering a broader debt consolidation program.

It's no secret that most people who are awash in debt typically have poor credit, so high rates and fees may do them in slowly. After all, what good is consolidation if you don't have enough cash left over to enjoy your life?

And don't be misled by a debt rearrangement that leaves you with a higher rate than you had before the consolidation. Your new loan may be a much longer term than before, forcing you to pay and pay and pay. And if you miss a payment or pay late, they will take you to the cleaners - adding extra fees and penalties.


Home Equity Loans and HELOCs

A Home Equity Line of Credit (HELOC), one of the most popular types of debt consolidation, lets you borrow money using your home as collateral. HELOC can be up to 80 percent of your home's value.

There are two types of loans that basically put your house on the line - home equity loans and home equity lines of credit (HELOC). The main difference is that home equity loans typically have fixed terms (amount, interest rate, due date) whereas HELOCs give you a limit you can use anytime, without a guaranteed fixed rate.

Both options are risky because they could jeopardize your house. Bear in mind that credit cards are considered unsecured. If you stop paying off a credit card, the worst you could end up with are credit dings and harassing letters and e-mails.

But when you put your house up as collateral with a mortgage or home equity loan, it becomes a secured loan, meaning a few missed payments could cost you the house. In effect, the HELOC approach to consolidation puts your assets on the line, and it converts your unsecured loans into secured debt.

In a way, taking out a HELOC means you're betting your house that you can pay back the loan (plus interest and fees). So before you dive into the first HELOC offer that comes your way, take some time to consider the risk.

Balance Transfer

In theory, a credit card balance transfer can consolidate your debt onto one card. You pay an upfront transfer fee (between 2 and 5% of your total balance), and you’ll have between 6 months to a year interest-free.

However, if you make a payment late (or not at all), you will immediately lose the no-interest benefit. If you continue to make your payments faithfully during the introductory period, the idea is to pay off as much of your balance as you can before the APR hike take effect.

The risk here is akin to paying your MasterCard bill with your Visa card. The balance transfer is still a credit card. If a credit card got you into this financial hole in the first place, another one won't get you out unless you change your spending habits.


This recent option allows people to lend to each other through peer-to-peer lending companies. Companies like Prosper and Lending Club connect people who need money with people who have money to invest.

It's essentially a win-win situation. Lenders benefit by getting a nice return on their money, and the borrower gets to consolidate at a considerably lower rate than they'd find elsewhere.

The key to the peer-to-peer lending system is the absence of the institutional "middleman" that you find in traditional banking. It's just the lender, the borrower, and a small peer-to-peer lending company that takes a small fee off the top and provides better than average rates to everyone.

Peer-to-peer loans are fixed-rate agreements. Your APR, amount, and timeline for repayment are all written in stone, helping you devise an effective get-out-of-debt regimen.

Debt Consolidation vs. Bankruptcy

There are many other options for people in debt, ranging from credit counseling agencies and government assistance for consumers to declaring bankruptcy. Here is a brief list of the advantages of consolidating versus the disadvantages of bankruptcy:

  • Saves Your Reputation and Credit Rating - Debt consolidation is not a matter of public record, and no one will ever know about it. On the other hand, bankruptcy records are now easily viewed online, and bankruptcy will sit on your record for many years. Debt consolidation never affects your credit score, but a bankruptcy filing is like kicking it in the groin.
  • Maintains Your Ability To Borrow - You can keep your credit cards after consolidating, although we stress they should be reserved for emergencies. If you continue to spend freely, it defeats the purpose of the consolidation. After a person files for bankruptcy, of course, they will have no access to credit.

The Cons Of Consolidation

There are pros and cons to weigh when considering how well consolidation will work for your particular situation. In general, it's a very attractive option for saving your credit rating and rebuilding your life with a more disciplined approach to managing money.

But you could lose your shirt, your assets, and your house if you put them up as collateral. The hidden fees and tax liability could end up costing you a small fortune, and worst of all, a missed payment on your consolidation loan might result in a forfeiture of your property.

And it's possible that any money you save through consolidation will be considered taxable income by the IRS. You may also have to pay taxes on other settled debt as reported to the IRS by credit card companies and creditors.

Consolidation is welcome relief for those who need it to survive, but the real way to get out of debt is to change your spending habits and start living within your means.

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