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. This calculator compares the total cost of your current debts against a consolidation loan so you can see whether you genuinely save or simply spread the cost over longer.

Before consolidating, check whether any of your existing debts carry early repayment charges. Also ensure the consolidation loan does not require security against your home, as this turns unsecured debt into secured debt and puts your property at risk.

What is debt consolidation? Replacing multiple debts with single loan. Benefits: single monthly payment; potentially lower APR (especially if reducing 25% credit cards to 8% loan); fixed end date. Drawbacks: longer repayment period can cost more overall; secured loans use home as collateral (risky); doesn't address underlying spending habits. UK 2026: ~3M households have multiple debts; average consolidation £8,000-£20,000. Always calculate: total interest old debts vs new loan over full term.

UK debt consolidation loan rates 2026. Unsecured personal loan: 7-15% APR (good credit), 20-35% APR (poor credit). Loan amount: £1,000-£35,000 typical. Term: 1-7 years. Lender: own bank cheapest (existing customer), then comparison sites (Tesco Bank, M&S Bank, Sainsbury's Bank competitive). Secured loan (homeowner loan): 6-12% APR — risk losing home if default. Generally avoid: 12-15% APR fine; 20%+ APR consolidation rarely beats existing credit card APRs.

0% balance transfer cards — better for credit card debt. Move £3,000-£10,000 credit card debt to 0% balance transfer card (24-32 months 0% interest). Transfer fee: typically 2.9-3.9% of balance. £10,000 transfer with 3% fee = £300, then 28 months 0% interest. Pay £360/month = clear in 28 months for £300 total cost vs £1,500+ interest on standard credit card. Requirement: good credit score, not exceeding 90% of limit. Use carefully — must clear before promotional rate ends.

When consolidation makes sense. Mathematics work: total cost of new loan LESS than sum of existing debts over equivalent timeframe. Cash flow improvement essential without long-term cost increase. Specific scenarios: high-interest credit cards (20%+ APR); high-cost short-term loans being rolled over; payday loan trap; multiple direct debits causing missed payments. Doesn't help if: spending habits unchanged (debt rebuilds); negative equity in home (can't secure loan); poor credit (consolidation rates worse than credit cards).

Free UK debt help. Don't go to commercial 'debt management' companies for first advice — they charge 15-30% of debt repayments as fees. Free help: StepChange (largest UK charity); National Debtline; Citizens Advice; PayPlan. All offer Debt Management Plans (DMP), IVA setup, Bankruptcy advice — all free to consumer. Debt Relief Order (DRO): for low-income/low-asset debtors (debt under £30k, no home, low income — fee £90, debts written off after 12 months). IVA: 5-year arrangement, debts settled at agreed % of debt. Bankruptcy: extreme measure, £680 fee, 1-year discharge, 6-year credit file mark.