Calculator
Debt Consolidation Calculator
Debt Consolidation Calculator
Total Interest Saving
$337.48
Consolidation Verdict
Rolling your 3 debts ($14,500 at a blended 19.3%) into one 10.5% loan saves roughly $337.48 overall. Your payment drops to $311.66 a month — $211.88 of monthly breathing room — and everything is repaid in 5 yr. The $300 of fees are recovered within 2 mo.
*Assumes fixed rates, a 2%-of-balance plus interest minimum on existing debts with a $30 monthly floor, and no new borrowing or fees beyond the amount entered. Actual loan offers vary by lender, credit history and the National Credit Code. Educational only — not credit advice.
Rolling Several Debts Into One
Debt consolidation is the practice of taking out a single new loan — typically an unsecured personal loan, sometimes a balance-transfer card or a mortgage top-up — and using the proceeds to pay off multiple existing debts, leaving you with one balance, one rate, and one repayment. Australians hold more household debt than almost any other country, juggling credit cards averaging close to 20% interest, personal loans, buy-now-pay-later balances, and car finance at once. The appeal of consolidation is both mathematical and psychological: replacing several high rates with one lower rate can cut the total interest paid and shave years off the debt-free date, while a single predictable payment is far easier to manage than four different statements and due dates. The catch — and the reason consolidation gets a bad name — is that it only works when the new money is genuinely cheaper and the term is not stretched so far that interest has longer to compound. Rolling cards into a seven-year personal loan at a barely lower rate often costs more overall, even though the monthly payment drops. And consolidation without a behaviour change is the classic trap: freed-up card limits get re-used, and eighteen months later the borrower has the consolidation loan plus fresh card debts. This calculator models both sides of the trade: the blended rate you are paying now, the total cost on your current schedule, and the total cost of the consolidation loan, so you can see whether the move actually saves money before you apply.
Comparing Two Futures
The tool runs two parallel simulations. First, it models your current situation: each existing debt accrues monthly interest (balance × annual rate ÷ 12) and is paid down by its minimum repayment — modelled as 2% of balance plus that month's interest, with a $30 floor. The simulation counts the months until every debt reaches zero and totals the interest — this is your baseline cost. The overall payoff horizon is the slowest-clearing debt. Second, it models the consolidation loan on the combined balance at the new rate. You choose one of two strategies: a set term (the loan repaid evenly over the years you pick, using the standard amortisation formula), or keeping your current total payment amount, in which case the tool simulates how quickly the new loan clears at the lower rate. In both cases it totals interest and adds your establishment and monthly fees to get the new total cost. The verdict is the difference between the two futures: Total Saving = Current Total Repayment − (New Debt + New Interest + Fees). Consolidation wins when the lower rate and disciplined term more than offset any fees and any term extension. It loses when the term stretches too long or the new rate barely undercuts the blended existing rate — both scenarios the breakdown panel shows you explicitly. Because rates are fixed in the model, re-run with the actual offer's comparison rate once you receive it, since that figure is the legally required true-cost measure under Australian credit law.
Expert Insights
Compare Total Cost, Not Monthly Payment
A lower monthly payment is the marketing hook of every consolidation ad, but it is not the same thing as saving money. Stretching the same debt over more years almost always reduces the payment while increasing total interest. Judge every offer by the total amount you will repay under each path — this calculator's headline 'Total Interest Saving' figure is the number that matters. A deal that reduces your payment but increases lifetime cost is a cash-flow convenience, not a saving.
Use the Comparison Rate, Not the Headline
Australian lenders must display a comparison rate that folds in most fees and charges. For consolidation shopping it is the fairest yardstick between offers. A loan advertising 8.99% with a high establishment fee can be more expensive than a 9.5% loan with no fees over a short term. Enter the comparison rate as the consolidation rate in this tool and the fees separately for the most honest picture.
The Behaviour Rule Beats the Interest Rate
The most common consolidation failure is a re-filled credit card eighteen months later. Consolidation frees up card limits; without spending discipline, those limits become new debt sitting on top of the old. Cut up the cards, delete them from wallets, or at minimum set the limits to zero as part of the consolidation. The arithmetic only pays off if the consolidation is paired with a closed door on new borrowing.
Actionable Tips
- 1
List Every Debt With Its Real Rate
Pull the exact balance and interest rate from each statement — cards, personal loans, car finance, BNPL plans that have rolled into interest. Enter them here so you see your true blended rate. Debt plans fail most often because of the debts people pretend do not count. A consolidation application will require the same list anyway, so do the work once.
- 2
Check the Term Before You Celebrate the Rate
When you get a loan offer, run it through this tool at several term lengths. The same loan at five years versus eight can differ by thousands of dollars in total interest even with an identical rate. Pick the shortest term whose payment you can genuinely afford — that is where the saving lives.
- 3
Consider the Mortgage Top-Up Carefully
Rolling consumer debt into a mortgage extension gives the lowest rate of all — but converts unsecured debt into debt secured on your home, often stretching a car loan's worth of repayments over twenty more years. Run both the personal loan and the mortgage extension through this tool and compare the total interest, not just the rate. The secured option is only superior if the term stays aggressive.
Real-World Examples
Alicia's Cards Became One Loan and a Date
Alicia carried $14,500 across three cards at rates from 15% to 24%, paying $340 a month between them and barely denting the balances. She consolidated into a five-year personal loan at 10.5% with a $300 fee. Her payment dropped to $314, everything cleared in five years for $4,200 of interest instead of the projected $9,800 on the cards, and she cut the cards after paying them out. The fixed end date — more than the rate — is what kept her on track.
Omar Stretched a Term and Regretted It
Omar consolidated $24,500 of mixed debt into a seven-year loan at 9.9%. The monthly payment fell nicely, but when he ran the numbers later he saw he would pay $8,900 in interest — $2,100 more than a five-year version of the same loan. He refinanced again at month fourteen into a five-year term once his income rose. The lesson he shares now: consolidation fixed his cash flow the first time, but only the shorter term fixed his wealth.
The Chen Family Beat the Re-Fill Trap
The Chens consolidated both their card balances and a car loan top-up into a single personal loan — then, unusually, asked their bank to reduce the card limits to zero at the same time. Eighteen months later, friends in the same position owed on the consolidation loan plus fresh card debt; the Chens owed only the loan, nearly half repaid. The rate saved them interest; the limit cut saved them from themselves.
Glossary of Terms
- Blended Rate
- The single interest rate that represents your weighted average across all debts, weighted by balance. It is the benchmark a consolidation loan must beat to save money.
- Comparison Rate
- The Australian mandatory disclosure rate that folds establishment, monthly, and annual fees into a single annualised figure, so loans can be compared like-for-like.
- Debt Rollover
- In consolidation planning, applying the freed-up payment from a cleared debt to the next target — or, in a consolidation loan, the discipline of not re-using freed credit limits for new borrowing.
Frequently Asked Questions
Everything you need to know about this topic.
Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.