- The number to beat is the blended APR — the balance-weighted average of your debts, not the highest one.
- A lower monthly payment proves nothing on its own: stretching the term lowers the payment and raises total interest.
- Fees financed into the loan are paid interest on for its full term, which is why they belong inside the principal in any honest comparison.
- Consolidating does nothing about the spending that created the balances — a cleared card with an open limit is a card that can refill.
How debt consolidation works
Consolidating means taking one new loan large enough to clear several existing balances, so that a spread of rates and due dates becomes a single rate and a single payment. It can be genuinely cheaper, and it can be a way of paying more while feeling better — the difference is entirely in the numbers.
The number that decides it is the blended APR: the balance-weighted average of what you owe. If your balances are $9,000 at 21.99%, $4,500 at 19.99% and $12,000 at 9.5%, the blended rate is 15.76% — not the 21.99% a lender’s comparison is likely to anchor on, and not the 17.16% a plain average of the three rates would give.
A consolidation loan below the blended rate is cheaper on interest. A loan above it is not, no matter how much lower the monthly payment is — and the payment can always be made lower by lengthening the term.
The math
The blended rate weights each APR by its balance, because a rate on $12,000 matters nearly three times as much as the same rate on $4,500. A plain average of the rates ignores that and is the most common way this comparison goes wrong.
The baseline runs each debt to zero independently, at the payment you entered for it, and sums the interest. It deliberately does not roll a cleared debt’s payment onto the next one. That is the avalanche/snowball strategy, it is a different intervention, and crediting its benefit to consolidating would make consolidation look better than it is — /tools/debt-payoff is where that comparison belongs.
The consolidation side amortizes the total balance plus any financed fees at the new rate over the new term. Because the fees are inside the principal, they are already carried by the interest figure — subtracting them again from the saving would double-count them. Payoff on the baseline is the longest of the individual payoffs: you are debt-free when the last one clears, not the first.
Worked example
$9,000 at 21.99% paying $250, $4,500 at 19.99% paying $150, and $12,000 at 9.5% paying $320. That is $25,500 owed, $720 a month, a blended APR of 15.76%, and — left alone — five years until the last one clears with $9,923 of interest.
Consolidate the lot at 11.5% over five years with $500 of financed fees. The payment falls to $572 a month, total interest falls to $8,308, and you save $1,615 while freeing $148 a month. It works because 11.5% is comfortably below the 15.76% blend. Push the consolidation rate to 17% and the arithmetic reverses even though the payment still looks lower — which is exactly the case this page exists to catch.
Key terms
- Blended APR
- The balance-weighted average rate across your debts. Any consolidation offer has to beat it to be cheaper on interest.
- Consolidation loan
- A single loan large enough to clear several balances, replacing them with one rate, one payment and one payoff date.
- Term
- How long the consolidation loan runs. It is the lever that makes a payment look attractive, and the one that quietly increases total interest.
- Balance transfer
- Moving a card balance to another card, usually at a promotional APR for a fixed window. Model it by entering the promotional rate and a term matching the window.