When it helps
A consolidation loan pays off several debts, usually credit cards, and leaves one fixed payment. It is worth it when the new APR, including the origination fee, is clearly lower than what you pay today.
Example
Three cards totaling $12,000 at 21.5% to 28% APR, paying $375 a month, cost about $7,800 in interest. A 36-month loan at 11.5% with a 3% fee costs about $2,673, saving about $5,127, with a payment of $407.58.
Frequently asked questions
What is the risk?
Running the cards up again after consolidating. Consider lowering the limits or closing some cards.
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.