Debt Consolidation Calculator

Debt consolidation replaces multiple debts, credit cards, overdrafts, store cards, with a single loan at one interest rate and one monthly payment. The idea is to reduce your overall interest cost and simplify your finances. However, it only saves money if the new rate is lower than the weighted average of your existing debts. Extending the repayment term can lower your monthly payment but increase the total interest you pay, so this calculator compares the total cost of your current debts against a consolidation loan and shows whether you genuinely save or simply spread the cost over a longer period.

Before consolidating, check whether any of your existing debts carry early repayment charges, and add them with any arrangement fee on the new loan to the calculator's fee box. Check too that the consolidation loan does not require security against your home, because that turns unsecured debt into secured debt and puts your property at risk. Homeowner loans of this kind are priced at roughly 6-12% APR, cheaper than an unsecured loan, but the price of default is your home. Around 3M UK households have multiple debts in 2026, and the typical consolidation runs to £8,000-£20,000, so the decision deserves a careful sum rather than a hunch.

Unsecured personal loans for consolidation typically run from £1,000 to £35,000 over terms of 1-7 years. With good credit you can expect 7-15% APR, while poor credit pushes the range to something like 20-35%. Your own bank is usually cheapest if you are an existing customer, followed by lenders on comparison sites, with Tesco Bank, M&S Bank and Sainsbury's Bank often competitive. A rate of 12-15% can still make sense against store cards, but a consolidation loan at 20% or more rarely beats the credit card APRs it is meant to replace. The worked example on this page shows what a good outcome looks like: replacing a £3,000 credit card at 22.9%, a £2,000 store card at 29.9% and a £3,000 overdraft at 39.9% EAR with an £8,000 loan at 7.9% over 4 years cuts the monthly outgoing from £219 to £193.91 and the interest from £9,327.80 to £1,307.58, a saving of £8,020.22. Most of that saving comes from time: payments that barely cover the interest would take 98 months to clear the store card.

If most of what you owe sits on credit cards, a 0% balance transfer card is often the better tool. You can move £3,000-£10,000 of card debt to a 0% card, where the longest deals run to about 36-38 months (MoneySavingExpert best buys, September 2026), paying a transfer fee of typically 2.9-3.9% of the balance. On a £10,000 transfer with a 3% fee, that fee is £300 and is added to the balance. If you then pay £360 a month you clear the £10,300 in 29 payments, the last one £220, for a total cost of £300. The same £360 a month on a card charging 24.9% APR would take 40 months and cost £4,240.43 in interest. You will need a good credit score, and the transferred balance should not exceed 90% of the new card's limit. The trap is failing to clear the balance before the promotional rate ends, when the card reverts to its standard rate.

Consolidation works when the total cost of the new loan is less than the sum of your existing debts over an equivalent timeframe, and when it improves your monthly cash flow without adding to the long-term cost. It suits people paying 20% or more on credit cards, those rolling over high-cost short-term loans or stuck in a payday loan trap, and anyone whose several direct debits keep causing missed payments. A loan at 8% replacing cards at 25% is the classic case. It does not help if spending habits stay the same, because the cards simply fill up again. Nor does it help in negative equity, when there is nothing to secure a loan against, or with poor credit, when the consolidation rates on offer are worse than the cards you already hold.

Do not go to a commercial debt management company for your first advice, as they charge 15-30% of your debt repayments as fees. StepChange, the largest UK debt charity, National Debtline, Citizens Advice and PayPlan all give the same help free of charge, including setting up Debt Management Plans, IVAs and bankruptcy advice. A Debt Relief Order suits people in England and Wales who owe less than £50,000, do not own their home, usually have less than £75 a month of spare income, hold under £2,000 of assets and do not own a vehicle worth £4,000 or more. It has been free since 6 April 2024, you apply through an approved debt adviser, and the debts are written off after 12 months. An IVA is a 5-year arrangement that settles debts at an agreed percentage of what is owed. Bankruptcy is the extreme option, with a £680 fee, discharge after 1 year and a mark on your credit file for 6 years.