What is a weighted average interest rate?

The weighted average rate is the blended interest rate across all your debts, weighted by each debt's balance. Formula: Weighted Rate = Σ(Balance × Rate) / Total Balance. Example: $5,000 at 20% and $10,000 at 8% → Weighted Rate = (5000×0.20 + 10000×0.08) / 15000 = (1000+800)/15000 = 12%. This is the rate a consolidation loan needs to beat to save interest.

What is the break-even point for debt consolidation?

Break-even is when cumulative monthly savings equal the upfront fees. Break-even months = Total Fees / Monthly Savings. If you pay $1,000 in origination fees and save $150/month, break-even = 7 months. If you plan to pay off the loan before break-even or sell your house before then, consolidation may not make financial sense.

What are the types of debt consolidation?

Main options: (1) Personal loan — unsecured, fixed rate, 2-7 years. Good for credit card debt. (2) Balance transfer card — 0% intro APR for 12-21 months, then high rate. Watch the transfer fee (3-5%). (3) Home equity loan/HELOC — lowest rates but puts home at risk. (4) 401k loan — no credit check but risks retirement savings. (5) Debt management plan (DMP) — through nonprofit credit counseling.

Debt Consolidation Calculator – Should You Consolidate? | PrimeCalculator

🔀 Debt Consolidation Calculator

Debt Consolidation Calculator — Is It Worth It?

Q: When does debt consolidation make sense?

Debt consolidation makes sense when: (1) the new loan rate is lower than the weighted average rate of your current debts, (2) the monthly payment reduction is meaningful for your budget, (3) you won't accumulate new debt, and (4) fees and costs are recovered within a reasonable break-even period (typically under 24 months).

Compare your current debts to a new consolidation loan. See monthly savings, total interest savings, break-even point, and get a clear verdict on whether consolidation makes financial sense.

✅ Clear Verdict

💰 Monthly Savings

📊 Before vs After

📅 Break-Even Point

Debt Consolidation Calculator

Enter current debts + consolidation loan → get verdict

Current Debts

Debt Name Balance Min Pmt APR%

New Consolidation Loan

Loan Amount (auto-fills from total balance)

Interest Rate

Loan Term

Origination Fee / Points

How It Works

Enter all your current debts (balances, minimum payments, and APRs). Then enter the consolidation loan terms. The calculator shows whether consolidation saves money, how much, and when you'd break even on any fees.

Weighted Rate

Blended APR of debts

vs New Rate

Must be lower to save

Break-Even

Fees ÷ monthly savings

Verdict

✅ or ❌ clear answer

✅

Consolidation Saves Money

The new loan rate is below your weighted average, saving interest overall.

$0 total saved

📋 Before — Current Debts

Total Balance$0

Monthly Payments$0

Weighted Avg Rate0%

Est. Total Interest$0

Number of Debts0

🔀 After — Consolidation

Loan Amount$0

Monthly Payment$0

New APR0%

Total Interest$0

Loan Term—

Monthly Savings

Interest Saved

—

Break-Even

Weighted Rate

📊 Total Interest: Current Debts vs Consolidation Loan

📋 Current Debts Breakdown

Debt	Balance	Min Pmt	APR	Monthly Interest	% of Total

When Does Debt Consolidation Make Sense?

Consolidation is worth it when the new loan rate is meaningfully lower than your current weighted average rate, and you can recover any fees quickly. The key questions:

Is the new rate lower than your weighted average? This is the most important criterion. If your current debts average 18% and you can get a personal loan at 10%, consolidation clearly saves money.
How long is the break-even? If you pay $500 in fees but save $100/month, break-even is 5 months — excellent. If break-even is 3+ years, reconsider.
Will you accumulate new debt? Consolidation fails if you pay off credit cards and then max them out again. The behavior change matters as much as the math.

Types of Debt Consolidation

Option	Typical Rate	Best For	Risk
Personal Loan	7–25%	Credit card debt consolidation	Rate depends on credit score
Balance Transfer Card	0% intro, then 18–28%	Small balances, good credit	Reverts to high rate; transfer fee 3-5%
Home Equity Loan (HELOC)	5–9%	Large balances, homeowners	Home at risk if you default
401k Loan	Prime + 1% (~6-8%)	Last resort — no other options	Loses tax-deferred growth; early exit penalties
Debt Management Plan	Reduced rate by negotiation	Multiple credit cards, struggling	Closes accounts; impacts credit

Frequently Asked Questions

Your weighted average rate is the blended APR across all debts, weighted by balance. Formula: Σ(Balance × Rate) / Total Balance. Example: $8,000 at 22% and $5,000 at 9% → Weighted Rate = (8000×0.22 + 5000×0.09) / 13000 = (1760+450)/13000 = 17.0%. Any consolidation loan with a rate below 17.0% saves interest. Our calculator computes this automatically.

Break-even is when cumulative monthly payment savings equal the upfront fees: Break-even months = Total Fees / Monthly Payment Savings. Example: $1,500 origination fee, $120/month savings → break-even in 12.5 months. If you plan to pay off the debt or sell your home before break-even, consolidation doesn't make financial sense. For no-fee options (some personal loans), break-even is immediate if the rate is lower.

Short-term impact: applying for a new loan creates a hard inquiry (−5 to −10 points for a few months). Long-term impact: if you close old credit cards after paying them off, your credit utilization increases and average account age decreases — both can hurt your score. Best practice: don't close credit card accounts after paying them off via consolidation; just keep them open with zero balance. The credit score impact is usually minor and temporary.

For a personal loan (most common consolidation tool): 670+ gets good rates (7-15%), 700+ gets excellent rates (5-12%), below 650 may face high rates (18%+) that eliminate savings. For a balance transfer card: usually 670+ required for 0% offers. For home equity: 620+ for most lenders. If your credit score is low, working on improving it before consolidation can get you a much better rate and larger savings.