Should you consolidate
your debt?

A debt consolidation loan is not free money and it is not magic. It is a specific financial trade: you give up the flexibility of revolving credit card debt in exchange for a fixed rate, a fixed monthly payment, and a fixed end date. For the right situation, that trade is one of the best deals available to a normal person. For the wrong situation, it's a shuffle that costs more than staying put.

The math is simple. A consolidation loan saves you money if — and only if — the combined cost of the loan's interest and its origination fee is less than the interest you'd pay staying on your current cards. For most people with credit card APRs above 18%, that math works out cleanly in favor of the loan, even with fees. Below 15%, it gets murky and depends heavily on the term length you choose.

The hidden catch: term length

This is where people get burned. A 72-month loan at 11% has a seductively low monthly payment — but you're paying interest for six years instead of three. Stretching the term can turn a winning consolidation into a losing one. The calculator above lets you toggle the term to see this effect in real time. A good rule: never pick a term longer than the time it would take you to pay off the cards on your own.

The real risk

The biggest danger of consolidation isn't the loan itself — it's what happens to your credit cards afterward. The moment the loan pays them off, you have zero balance and tens of thousands of dollars in available credit. Most people who consolidate without changing their habits end up, within two years, with both a loan payment AND new credit card debt. Close or freeze the cards the day the loan funds. For the complete framework that prevents this, see our piece on how to pay off $10,000 in credit card debt — the same six-step plan applies at larger balances.