Debt Consolidation Calculator

InCharge’s Debt Consolidation Calculator is a smart way to find out if working with a credit card consolidation company will save you money, either through a debt management program or debt consolidation loan. To compare costs for a debt management program, enter the expected interest rate (typically 9-11%) and loan term (3-5 years) on the top half of the page. On the bottom, enter only unsecured debts (credit cards, payday loans etc.). For a DCL, enter expected rate (6% or higher, depending on credit score) and term (3-5 years) on top and any unsecured or secured debt (car, boat, RV) below.

Debt Consolidation Features

Debt consolidation should lower your monthly payment and interest charges, thus saving you money while helping you eliminate debt. There also is the convenience factor of making one payment to cover your bills, instead of writing five or 10 checks every month.

Debt consolidation can be done through a credit counseling agency which works with lenders on your behalf to reduce interest rates and monthly payments in a debt management program. The goal in a debt management program is to eliminate debt in 3-to-5 years.

If you choose a debt consolidation loan, a bank makes one loan to cover all your debts, then you make one monthly payment to cover the new loan. The interest rate on a debt consolidation loan is usually much less than what you pay on bills like credit cards, where the average interest rate is 15.5% and could be as high as 29%.

Whether you choose a debt management program or debt consolidation loan, be sure you are accomplishing your goals of lower interest rates and lower monthly payments. Also, factor in the length of time it will take to pay off the debt to be sure you’re getting long-term savings as well.

The InCharge Debt Consolidation Calculator will help you compare rates and see if debt consolidation is the best solution to your financial problems.

Definition of Calculator Terms

ANNUAL PERCENTAGE RATE: The amount of interest charged on a debt for a whole year, including interest, fees, and any other costs. It is used most often in computing the cost of credit cards. The formula works like this: Average daily balance divided by number of days in billing cycle (typically 30), multiplied by the periodic daily interest rate (PDR), which is then multiplied by the number of days in a billing cycle (30). For example: If you owed $1,000 owed on a credit card at 15% APR for one month, your interest payment would be $40.99 for one month. The math involved is 1,000/30 = 33.33 x PDR (15/365 = .041) x 30 = $40.99.

BALANCE: The amount you still owe on your debt. It’s computed by adding all purchases in billing cycle, plus whatever fees were involved in those purchases (example: fee for using ATM), plus amount unpaid from previous billing cycle (if not already paid in full) and applicable interest rate charge.

MONTHLY PAYMENT: Amount you expect to pay on your debt every month.

YEARLY RATE: The amount of interest charged over the course of 12 months. Also known as the Annual Percentage Rate or APR.