Debt Consolidation Calculator

Use this calculator to figure out how much time and money you can save by "consolidating" a credit card balance--or multiple credit card balances. Consolidation in this sense means that you repay the credit card debt with lower-interest debt, such as a home-equity loan or even a personal loan. The calculator lets you estimate time to payoff for up to five credit card balances. The calculator also lets you see how much money you'll save in interest. See how long it will take you to pay off a credit card balance if you pay a certain amount per month (entered as a percentage of your balance). The calculator assumes you are not making additional credit card charges after you pay off the first credit card.

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Calculator Legend

Credit Card Description: If you wish, you can enter a label for each credit card instead of the default labels of "Credit card 1," "Credit card 2," etc. You would likely want to enter the name of the issuer of each credit card to help you keep track. Interest Rate: Enter the credit card's current APR as a percentage. Current Balance: Enter the credit card's current balance as of today. Consolidate? Select yes if this is one of the credit cards whose balance you are going to fold into the new loan. You need to include credit cards you are not folding into the new loan, since they affect your ability to pay off the consolidated debt. Simply select "No" for those cards. Consolidate at Interest Rate of: Enter the annual interest rate of the loan you will use to consolidate your debt. Min. Payment: Enter the percentage of your balance you will pay each month.

Credit Cards and Credit Card Debt Explained

Credit card debt is just about the most expensive kind of debt the average person will ever carry. It's not just that the interest rates are high, but that the compounding interest quickly mires many people in debt.

Interest Rate and Credit Cards

Here are some important facts on credit cards' interest:
  • The interest rate on a credit card compounds. That means, the interest is calculated not only on the original balance, but upon any interest carried over. That's why so many people work so hard to pay off balances before the end of each monthly payment cycle. You don't just want to avoid paying interest now. You want to avoid paying interest on the interest next month.
  • The credit card interest rate is variable. Many cardholder agreements in fact allow the credit card issuer to raise the rate for any reason at all. Most commonly, however, the credit card issuer will raise your interest rate if your credit rating changes. Your credit rating may change because of something you did with that credit card, such as missing a payment. Your rate may very well rise if you approach the credit limit, since this usually is considered a sign of poor credit. Of course, they can also lower your credit rating. They just won't do this on their own. You should try asking (in a letter, not over the phone) for a lower rate, particularly if your credit has recently improved. The calculator assumes your interest rate will stay the same. But the fact that the rate may go up is an excellent reason to lower your balance now, particularly if you are approaching the credit limit.

Credit Card Penalty Fees

Credit card issuers make a great deal of money from penalty fees, such as late fees and over-the-limit fees. These exorbitant fees are another reason to get out of credit card debt.

Credit Card Debt: Unsecured Debt

The one good thing about most credit card debt is that it is unsecured. That is, there is no collateral for the creditor to seize automatically when people do not pay their credit card bills. Of course, the creditor can take you to court to try to get a judge to order you to pay, and in the meantime your credit rating will be very bad. But if you miss payments on a home equity loan or an auto loan, you very likely will risk losing your home or car. Keep that risk in mind if you are considering trading credit card debt in for home equity debt. While home equity debt is much cheaper, it is also much riskier.