DelDebtDebt consolidation saves more than the debt avalanche only when the new loan's APR, including its origination fee, is clearly lower than your current rates and you keep paying the same monthly amount. If you take the loan's lower required payment instead, or the term is long, the avalanche on your existing debts often costs less. The calculator below compares both on your numbers: the avalanche on your current debts, the consolidation loan at its fixed payment, and the same loan at your current budget.
How to use the calculator
Enter up to five debts with balance, APR and minimum payment, and the extra amount you pay each month on top of the minimums. Then describe the consolidation loan offer: its APR, term in months and origination fee in percent.
The calculator shows three results:
- Avalanche, keep your debts: you pay minimums on everything and put the extra on the highest APR first.
- Loan, fixed payment only: you take the loan and pay only its required payment until the term ends.
- Loan, same budget as today: you take the loan but keep paying what you paid before, minimums plus extra.
The origination fee is added to the loan amount, which is common for personal loans. Some lenders deduct it from the money you receive instead; either way, you pay it. The fee is counted in the consolidation totals, so the comparison is fair.
Worked example: $14,700 in three debts
The calculator starts with this example:
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Visa | $7,500 | 24.9% | $190 |
| Store card | $2,200 | 29.9% | $70 |
| Personal loan | $5,000 | 13% | $170 |
That's $14,700 of debt with $430 in minimums. Add $200 extra and your monthly budget is $630. The average APR, weighted by balance, is about 21.6%.
The avalanche pays the store card first (paid off in month 10), then the Visa (month 29), then the personal loan (month 31). You're debt-free in 31 months with $4,287.29 in interest. For comparison, the snowball on the same budget also takes 31 months but costs $4,675.19.
The consolidation offer: 14% APR, 36 months, 5% origination fee. The fee is $735, so the loan is $15,435 and the payment is $527.53 a month.
| Option | Monthly payment | Debt-free in | Interest + fee | vs. avalanche |
|---|---|---|---|---|
| Avalanche on current debts | $630 | 31 months | $4,287.29 | — |
| Loan, fixed payment only | $527.53 | 36 months | $4,291.14 | $3.85 more |
| Loan, same $630 budget | $630 | 30 months | $3,584.42 | $702.87 less |
Two different answers from the same loan. If you pay the loan's required $527.53, you save $102.47 a month in cash flow, but you pay slightly more in total and finish five months later than the avalanche would. If you keep sending $630, the loan saves $702.87 and finishes a month sooner.
What changes the answer
The rate
Keeping the fee at 5%, the term at 36 months and the budget at $630, the loan beats the avalanche only below about 16.6% APR. At 20% APR, even at the same budget it costs $5,303.72, which is $1,016.43 more than the avalanche. The break-even rate depends on the fee:
| Origination fee | Loan must be below about |
|---|---|
| 0% | 20.8% APR |
| 3% | 18.2% APR |
| 5% | 16.6% APR |
| 8% | 14.3% APR |
These thresholds apply to this example only (36-month loan, $630 a month). Your own break-even depends on your debts and budget, which is what the calculator is for. Also note it's well below the 21.6% average of the current debts: the avalanche already targets the most expensive debt first, so a loan has to do better than that, not just better than the average.
The fee
Without a fee, the same 14% loan at the same budget costs $2,559.79 and saves $1,727.50 compared with the avalanche. The 5% fee alone eats $735 of that before any interest.
The term
A longer term lowers the payment and raises the cost. The same loan over 60 months has a $359.15 payment, and if you pay only that, the total is $6,848.73: $2,561.44 more than the avalanche, and almost twice as long. Lenders often show the lowest monthly payment first. Look at the total cost instead.
When consolidation wins
- The rate is clearly lower. Your credit has improved and you qualify for an APR well below your card rates, after the fee.
- You keep paying the same amount. The savings come from the lower rate. Take the lower payment and the savings can disappear.
- One payment helps you stay on track. Several due dates are easy to miss, and a missed payment can mean late fees and a higher penalty rate. For some people, one fixed payment with a set end date is worth a small cost.
- Fixed end date. A personal loan has a schedule. Credit cards don't: minimum payments shrink as the balance falls, which stretches payoff out for years. Our how long to pay off a credit card guide shows how long minimums take.
Risks of consolidating
- Running the cards back up. Paying off cards with a loan frees up their credit limits. If new charges land on them, you end up with the loan and new card balances. One common approach is to keep the cards open but out of your wallet.
- A longer term costs more. Stretching two or three years of card payoff into five years of loan payments can cost more interest even at a lower rate.
- Fees you don't see in the rate. Origination fees, and for balance transfer cards a transfer fee and a promotional rate that ends. Compare the total cost, not the headline rate.
- Secured loans. Consolidating unsecured card debt into a loan secured by your home or car puts that asset at risk if you can't pay.
We don't recommend specific lenders. Compare offers from several, check the APR (which includes fees) and the total repayment amount, and read the terms before signing.
If you stay with the avalanche
The avalanche needs no application and no fee. It just needs discipline: minimums on everything and every extra dollar at the highest rate. The debt avalanche calculator shows your order, and if you want quick wins mixed in, see the hybrid debt payoff method. To follow the plan month by month, the DelDebt planner saves your debts, logs payments and reminds you of due dates. It works without an account.
FAQ
Is debt consolidation better than the avalanche method?
Only if the consolidation loan's rate, including fees, is low enough and you keep paying the same monthly amount. In our example, a 14% loan with a 5% fee saves $702.87 at the same budget but costs $3.85 more if you pay only the loan's required payment.
Does a consolidation loan lower my interest?
It can, if its APR is lower than the rates on the debts it replaces. But a longer term or an origination fee can make the total cost higher even at a lower rate.
What origination fee is too high?
There's no single cutoff; it depends on the rate and term. Put the fee into the calculator: in our example, the break-even APR drops from about 20.8% with no fee to about 14.3% with an 8% fee.
Can I consolidate and still use the avalanche?
Partly. If you consolidate only some debts, keep the avalanche on the rest by listing the new loan with its rate and payment next to your remaining debts. The highest-rate debt still gets your extra money first.
Should I close my credit cards after consolidating?
Not necessarily. The main risk is new charges on the cards you paid off. Whether to close them is a personal call: closing can make it harder to overspend, but it also removes available credit.