At a Glance
- Enter up to any number of existing debts with their balance, APR, and current monthly payment, then set a consolidation APR and term to generate a comparison – how this tool works
- The tool produces one of four colour-coded verdicts: genuine saving, monthly saving with higher total cost, costs more on both measures, or higher monthly with lower total interest – the four verdicts explained
- The most common outcome for debt consolidation is the amber verdict: a lower monthly payment but more interest paid overall – understanding the amber trap
- The breakeven bar shows the point at which cumulative monthly savings offset any extra interest cost – how the breakeven works
- All figures are illustrative examples only – not a quote, offer, or guarantee – about this tool
Debt consolidation: saving and true cost calculator
Enter your existing debts and a consolidation loan to see whether you genuinely save money – or just reduce your monthly payment at a higher total cost. All figures are illustrative examples only.
| Debt | Balance (£) | APR (%) | Monthly pmt (£) | Remaining interest | Months left |
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Consolidation loan
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Current debts
Consolidation loan
Cumulative interest paid – current debts vs consolidation loan
Remaining interest by debt
Figures are illustrative only. The remaining interest calculation for existing debts assumes payments continue at the amounts entered. Actual remaining interest depends on your lender’s calculation method and any fees or charges. The consolidation loan calculation uses standard UK amortisation. Debt consolidation may extend your repayment period and increase total interest paid even if monthly payments fall. Secured consolidation loans put your home at risk if repayments are not maintained. This tool does not constitute financial advice.
About this tool
The most common misunderstanding about debt consolidation is confusing a lower monthly payment with saving money. These are not the same thing. A lower monthly payment is simply what happens when you stretch debt over a longer period. Whether you actually spend less in total depends on the APR of the consolidation loan relative to your existing debts and, crucially, the term you choose. This tool is designed to make that distinction clear and measurable before you apply.
The tool combines two questions into a single calculation: does consolidation save me money on interest, and does it reduce my monthly outgoing? The answer to each can be yes or no independently, which is why there are four possible verdicts. Our guide to whether debt consolidation is right for you covers the broader decision in more detail.
What it calculates
For each existing debt, the tool calculates the remaining months and total remaining interest based on the balance, APR, and current monthly payment. It then calculates what a single consolidation loan at your chosen APR and term would cost monthly and in total interest. The two sets of figures are compared to produce a verdict and a month-by-month cumulative interest chart.
What it does not calculate
The tool does not account for early repayment charges on existing debts, arrangement fees on the consolidation loan, or the effect of any balance that a lender might not agree to consolidate. It also does not model variable rate changes on existing debts. All of these factors can change the actual outcome. The tool is a planning aid, not a quote.
Who it is for
Anyone with two or more debts who is considering consolidating them into a single loan and wants to understand the financial trade-off before applying. It is particularly useful for people who have been offered a consolidation loan with a lower rate but a longer term, and want to know whether the longer term wipes out the benefit of the lower rate.
How to get the most from it
Enter your actual current balances, APRs, and monthly payments for each debt rather than guessing. Check your credit card or loan statements for the exact figures. The APR on a credit card may differ from the purchase rate shown on marketing material. The more accurately you enter the current position, the more meaningful the comparison will be.
How this tool works
The tool uses standard UK amortisation to model both the existing debts and the proposed consolidation loan. The maths behind each step is straightforward once you understand what the tool is doing at each stage.
Enter your existing debts
Use the editable table to enter each debt you are considering consolidating. The default example uses five debts: two credit cards, a personal loan, car finance, and an overdraft. You can edit these in place, remove rows you do not need, and add new rows for any additional debts. Enter the current outstanding balance, the APR (not the monthly rate), and your current monthly payment for each.
Read the remaining interest and months columns
The tool calculates the remaining interest and months left on each debt based on your inputs. If the monthly payment column shows a “payment too low” warning for any debt, it means the payment entered does not cover the monthly interest charge at that APR and the balance would never reduce. Check the figure and correct it before reading the comparison. The total row at the bottom summarises the combined position.
Set the consolidation loan terms
Use the two sliders below the debt table to set the APR and term for the consolidation loan. The total to consolidate is calculated automatically from the sum of the balances in the table. Adjust the APR to reflect what you have been quoted or what you might realistically be offered. Adjust the term to see how different repayment periods affect the monthly payment and total interest cost.
Read the verdict and chart
The verdict banner shows which of the four outcomes applies to your inputs, with the key figures displayed as tiles. The cumulative interest chart plots how interest accrues month by month under both scenarios, so you can see visually where the lines cross (if they do). The debt breakdown bars below show which individual debts contribute most to the current total interest cost.
The four verdicts explained
Debt consolidation comparisons are usually presented as a simple yes or no, but the financial reality has four distinct outcomes depending on the interaction between APR difference and term length. Understanding which outcome applies to your situation is the core purpose of this tool.
Green: genuine saving on both measures
The consolidation loan has a lower APR than the weighted average of your existing debts and the term is similar or shorter. Monthly payments fall and total interest paid is also lower. This is the ideal outcome and means consolidation is financially beneficial on every measure in this illustrative example. It is most likely when consolidating high-rate debts such as credit cards into a lower-rate secured or unsecured personal loan over a comparable term.
Amber: monthly saving but higher total cost
The most common outcome. The consolidation loan has a lower or similar APR but the term is significantly longer than the remaining terms on your existing debts. The monthly payment falls but the extended repayment period means more interest accumulates overall. This is not always the wrong choice – cash flow relief can be worth a higher total cost in the right circumstances – but it should be a deliberate decision, not an accidental one.
Red: costs more on both measures
The consolidation APR is higher than the current weighted average across your debts, and the term is longer. Monthly payments increase and total interest is higher. This outcome typically arises when consolidating into a product with a higher rate than the existing debts, or when adverse credit restricts the available APR. Reducing the consolidation term improves the position but may not be enough to make consolidation worthwhile at a higher rate.
Blue: higher monthly but cheaper overall
The consolidation loan has a lower APR and a shorter term than the remaining terms on some or all of the existing debts. Monthly payments are higher than the current combined total, but less interest is paid overall because the debt is cleared faster. This outcome suits borrowers who can afford a higher monthly payment and want to minimise total cost. It is less common when consolidating credit card debt because credit cards typically carry longer effective terms if only minimum payments are made.
Understanding the amber trap
The amber verdict is worth examining in more detail because it is the outcome most people do not anticipate. A consolidation loan with a lower APR than your existing debts sounds straightforwardly good, but if it is taken over a term that is much longer than the remaining terms on those debts, the lower rate does not offset the extra years of interest accumulation.
A simple example illustrates the issue. Suppose you have a credit card with a £4,000 balance at 22.9% APR and you are paying £200 a month. At that rate, the card would be cleared in around 25 months and you would pay approximately £900 in remaining interest. If you consolidate that balance into a 5-year loan at 8% APR, your monthly payment on just that portion would be around £81 and you would pay approximately £860 in interest over the full term. The rate is much lower, but clearing the balance over 60 months rather than 25 means the total interest is similar, even with the better rate. Consolidate five debts like this and the extended term effect compounds significantly. Our guide to what debt consolidation is explains how this works in more detail.
The amber outcome does not mean consolidation is the wrong choice. Reducing monthly payments can be the right decision when cash flow is the primary constraint, when it avoids missed payments on individual debts, or when the alternative is using a higher-cost product. The important thing is that the decision is made knowing the trade-off, not in spite of it. Our guide on whether debt consolidation is right for you covers when each outcome might or might not suit your circumstances.
What to do with the results
The tool is a starting point for the decision, not the final word. The next steps depend on which verdict the tool returns.
If the verdict is green
Check whether the APR used in the tool is realistic for your credit profile. The rate shown may be a representative APR, meaning at least 51% of accepted applicants receive it – the actual rate offered to you may be higher. Use a soft-search eligibility checker before applying to see your likely rate without affecting your credit score. If the rate offered is close to the one modelled, consolidation is likely to be worthwhile on these figures.
If the verdict is amber
Try reducing the consolidation term to see whether a shorter loan converts the amber verdict to green. If the monthly payment at the shorter term is affordable, a shorter term is almost always the better financial outcome. If only the longer term is affordable, review the breakeven month and decide whether the cash flow benefit is worth the extra total cost given how long you are likely to hold the loan.
If the verdict is red
Consolidation at these inputs is not financially beneficial. Consider whether a lower APR is available by improving your credit profile or applying for a secured product, whether a much shorter term changes the picture, or whether a partial consolidation of only the highest-rate debts produces a better outcome. Our guide to debt consolidation for bad credit covers options when the available APR is restricted.
If the verdict is blue
Consolidation saves interest overall but increases the monthly payment. Confirm that the higher monthly payment is affordable before proceeding. If it is, this outcome represents the best financial result – you clear the debt faster and pay less overall. Ensure any early repayment charges on existing debts have been factored in, as these can erode some of the total interest saving shown.
Frequently asked questions
Why does the tool show I would pay more interest when the consolidation APR is lower than my current debts?
A lower APR reduces the rate at which interest accrues, but if the consolidation loan term is significantly longer than the remaining terms on your existing debts, the extra time in debt more than offsets the lower rate. Interest is a function of both rate and time, not just rate. A debt cleared in 24 months at 20% APR will often cost less in total interest than the same balance cleared in 60 months at 8% APR, because the 60-month version accumulates three times as many months of interest charges even at the lower rate.
The chart in the tool illustrates this directly. If the red line (current debts) flattens and stops before the blue line (consolidation loan), it means your existing debts would have been fully repaid before the consolidation loan ends. The area between the two lines after the red line flattens represents the extra interest the consolidation loan costs. Adjusting the term slider to a shorter period typically closes this gap and can flip the verdict from amber to green.
Should I include all my debts in the consolidation or just some of them?
There is no rule that says all debts must be consolidated together, and partial consolidation is often the better financial outcome. If some of your debts carry a low APR or are nearly paid off, including them in a consolidation loan may extend their effective term unnecessarily, adding interest cost. The highest-rate debts, particularly credit cards and overdrafts, are typically the ones where consolidation at a lower rate produces the greatest saving.
To model partial consolidation, remove the low-rate or nearly-cleared debts from the table and compare only the debts you are actually considering consolidating. Running the tool with different combinations of debts included can help identify which combination produces the best overall outcome. Our guide to how to consolidate debt walks through this decision in practical terms.
What APR should I use for the consolidation loan in the tool?
The most useful approach is to use the APR you have actually been quoted, or if you have not yet applied, use the representative APR from the product you are considering as a starting point. A representative APR is the rate offered to at least 51% of successful applicants – your actual rate may be higher depending on your credit profile. Using a soft-search eligibility checker before applying will give you a more accurate picture of the rate you are likely to be offered without leaving a hard search on your file.
It is also worth modelling a range of APRs by adjusting the slider to see how sensitive the outcome is to the rate. If the verdict is borderline green or amber at a given rate, a small increase in the actual rate offered could change the outcome. Understanding this sensitivity before you apply helps you set a clear threshold: for example, deciding that you will only proceed if the actual APR offered is at or below a certain level.
Does debt consolidation affect my credit score?
Applying for a consolidation loan generates a hard search on your credit file, which has a small short-term negative effect on your credit score. If the application is successful and you use it to pay off multiple credit card balances and close those accounts, your credit utilisation ratio typically falls, which can improve your score over the following months. The net effect on your credit score depends on your individual circumstances, the timing, and whether you maintain payments on the new loan consistently.
Missed payments on the consolidation loan would have a more significant negative effect than the hard search, so affordability should be the primary consideration when choosing the term. If the monthly payment on a shorter term that gives the green verdict is too high and risks missed payments, the amber outcome on a longer term with more reliable payment history may be the better credit outcome as well as the more manageable cash flow outcome. Our guide to how debt consolidation affects your credit score covers this in more detail.
Can I use this tool to model a secured consolidation loan?
Yes. Enter the consolidation APR and term that correspond to the secured loan being considered. Secured loans typically offer lower rates than unsecured products, particularly for larger amounts or borrowers with adverse credit, which makes them more likely to produce a green verdict. However, a secured debt consolidation loan puts your property at risk if repayments are not maintained, and this is a material change in risk profile regardless of what the interest comparison shows. Our guide to secured loans for debt consolidation covers the additional considerations specific to securing the debt against your home.
When using the tool for a secured consolidation comparison, the same principles apply: a lower APR combined with a much longer term often produces an amber verdict rather than green. Secured loans tend to be offered over longer terms than unsecured products, which makes the term sensitivity check particularly important. Try modelling the same secured rate over different terms to find the term at which the verdict turns green, then assess whether that monthly payment is affordable.
Squaring Up
The central insight this tool is built around is that a lower monthly payment is not the same as saving money. In the majority of real consolidation scenarios, the two point in opposite directions: the monthly payment falls because the term is longer, and the longer term means more total interest paid regardless of the lower rate. Knowing which outcome applies before you apply is the difference between a deliberate financial decision and an accidental one.
- The amber verdict is the most common and the most important to understand. If the tool shows you would pay more overall despite a lower rate, try reducing the term before concluding that consolidation is right at that APR.
- Partial consolidation often beats full consolidation. Removing debts that are nearly cleared or already on a low rate from the table usually improves the verdict.
- The rate you are actually offered may differ from the representative APR. Use an eligibility checker to get a personal rate before committing to a decision based on tool outputs.
- Secured consolidation adds property risk. Even if the interest comparison is favourable, securing unsecured debt against your home is a fundamental change in the nature of the obligation.
The guides below cover the next steps depending on your situation.
Ready to see what you could borrow?
Checking won’t harm your credit score Check eligibilityAll figures produced by this tool are illustrative examples only and are not a quote, offer, or guarantee of any rate or saving. The remaining interest calculation for existing debts assumes payments continue at the amounts entered and that interest compounds monthly at the stated APR. Actual figures depend on your lender’s calculation method, any fees or early repayment charges applicable to your existing debts, and the specific terms of any consolidation product you apply for. Debt consolidation may extend your repayment period and increase total interest paid even when monthly payments fall. Secured debt consolidation puts your home at risk if repayments are not maintained. This tool does not constitute financial advice. If you are unsure whether debt consolidation is right for your circumstances, consider speaking to a regulated debt adviser or broker.
