Would one lower rate loan actually cost you less?
This calculator compares the credit cards and loans you are paying now with a single consolidation loan: a home equity loan, a HELOC, a personal loan or a debt consolidation loan. The new loan rate defaults to today's MonitorBankRates average for the product you pick, or the average in your state, and each debt row starts at today's average credit card, auto loan or personal loan rate so you can see whether the math works before you apply. It shows the new monthly payment, the honest comparison of total interest on your current path versus the new loan, how many months until you are debt free either way, and what happens if you keep paying your current total on the new loan. For home equity products it also checks whether you have enough equity to borrow. Read the differences between a home equity loan vs. HELOC before deciding which fits your situation.
Use your state's average rates
Loads the MonitorBankRates average home equity loan, HELOC, personal loan and debt consolidation loan rates in your state, plus the Census median home value for the equity check.
Consolidation Analysis
Compare your current debt payments with one new loan. Results update as you type.
Cumulative interest paid: current debts vs. consolidation loan
Interest only, so closing costs are not in the lines. A line that keeps climbing after the other has flattened is the loan that costs more in the end, even if its monthly payment is lower.
Side by side
| Comparison | Current Debts | Consolidation Loan | Difference |
|---|
Your debts one by one
| Debt | Balance | APR | Payment | Months to Payoff | Interest Left |
|---|
Does Consolidating Pay Off at Today's Rates?
As of September 21, 2026, the MonitorBankRates national average credit card rate is 11.71% and the average home equity loan rate is 6.77%, with personal loans averaging 10.88%. Someone carrying $25,000 of credit card debt at the average rate and paying $750 a month needs about 41 months to pay it off and pays roughly $5,388 in interest. Moving that balance to a 10 year home equity loan at the average rate cuts the payment to about $287, a saving of $463 a month, but the loan runs 120 months and costs about $9,484 in interest, which is more than the card would have cost. Keep paying the same $750 on the home equity loan instead and it is gone in about 38 months with only $2,774 in interest, saving $2,614 versus the card. The lower rate is the real win; the longer term is where the savings leak away.
| Example: $25,000 of credit card debt at 11.71%, consolidated into a 10 year home equity loan at 6.77% | Amount |
|---|---|
| Credit card at $750 a month: months to payoff | 41 |
| Credit card at $750 a month: total interest | $5,388 |
| Home equity loan monthly payment (120 months) | $287 |
| Home equity loan total interest (scheduled payment) | $9,484 |
| Home equity loan paid at $750 a month: months and interest | 38 months, $2,774 |
Rates change daily. This example is recalculated every time the page loads with the current MBR averages. Closing costs are excluded from the example.
How Debt Consolidation Works
Debt consolidation means taking out one new loan to pay off several existing debts. If the new loan is secured by your home, a home equity loan or HELOC, the rate is usually far below what credit cards charge because the lender has collateral. Unsecured personal loans and debt consolidation loans cost more than home equity products but do not put your house on the line, and they still tend to beat credit card rates by a wide margin. The calculator amortizes every debt you enter at its own APR and payment, so the current path total reflects what you would actually pay if you kept going as you are.
Key Terms
How to Use the Debt Consolidation Calculator
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List the debts you would pay off
Enter the balance, APR and the monthly payment you make now for each credit card, auto loan, personal loan or medical bill you would consolidate. The APR fields start at today's MonitorBankRates averages; replace them with the rates on your statements. Leave the balance at zero for rows you do not need. Do not include your existing mortgage; that stays put.
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Choose the new loan
Pick a home equity loan, HELOC, personal loan or debt consolidation loan. The rate fills in with today's average for that product, or your state's average if you selected one. Choose the term and add any closing costs, which you can pay up front or roll into the loan.
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Check your equity (home equity products only)
Enter your home value and mortgage balance. The calculator shows how much you could borrow at the lender's maximum combined LTV and warns you if the debts you listed exceed it. Compare your quote with today's home equity loan rates to see if it is competitive.
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Read past the monthly savings
The hero number is the change in your monthly payment, but the interest comparison and the months to debt free tell the fuller story. A lower payment on a 15 or 20 year loan can cost more in total than the debts you have now. The keep paying your current total scenario shows how to get the best of both.
Should You Use Home Equity to Pay Off Debt?
The math usually favors consolidation. Trading credit card debt at 11.71% for home equity debt at 6.77% is a real win on rate. The risk is not financial arithmetic: you are moving unsecured debt onto your home, and if something goes wrong the consequences are bigger. Here is how the trade off plays out:
Consolidation often makes sense when
- You have $10,000 or more in credit card debt at 18% APR or higher
- You have a stable income and a track record of paying bills on time
- You would commit to not running up the credit cards again after paying them off
- The new rate is at least 8 to 10 percentage points below your blended credit card rate
- You can afford the new payment even if your circumstances change, such as a job loss or a medical emergency
- You plan to keep paying your current total so the debt is gone sooner, not later
Avoid consolidation when
- You are likely to run up the credit cards again; consolidation alone does not fix spending habits
- Your job or income is unstable, since defaulting on a home equity loan can mean foreclosure
- The total debt is small enough to pay off aggressively in 1 to 2 years using the credit card payoff calculator
- You would be borrowing more than 80% of your home's value, where the rate premium often kills the savings
- You are close to retirement and want your home paid off, not borrowed against again
- The calculator shows total interest going up because the new term is much longer than your current payoff
The honest warning: consolidation feels like progress, but it is not actually paying down debt; it moves the debt from one place to another. The single biggest predictor of whether consolidation helps in the long term is whether you change the spending pattern that created the debt. If you do not, you will have a HELOC payment and new credit card balances within a year or two.
Frequently Asked Questions
Is it smart to pay off credit cards with home equity?
It can be very smart financially because home equity rates are typically much lower than credit card rates (today's MBR averages are 6.77% for a home equity loan versus 11.71% for credit cards). However, you are turning unsecured debt into secured debt, meaning your home is collateral. If you default, you can lose the house, a much worse outcome than the credit hits you would take with unsecured debt.
What is the difference between a HELOC and a home equity loan?
A home equity loan provides a lump sum with a fixed interest rate and fixed term, so the monthly payment is predictable. A HELOC is a revolving line of credit with a variable interest rate, similar to a credit card but secured by your home. HELOCs are flexible, since you draw what you need when you need it, but the variable rate creates payment uncertainty. The calculator treats a HELOC as if it were amortized at today's rate over the term you pick; a real HELOC may allow interest only payments during the draw period.
Are there closing costs?
Yes, home equity loans often have closing costs ranging from 2% to 5% of the loan amount, though some lenders offer no closing cost options in exchange for a slightly higher rate. Personal loans usually have no closing costs but may charge an origination fee of 1% to 8%. Factor these into your savings calculation: if closing costs are $4,000 and you save $200 a month, your break even is 20 months. The calculator includes them in the interest saved figure and lets you roll them into the loan.
How much equity do I need to qualify?
Most lenders require you to keep at least 10% to 20% equity in your home after the home equity loan. So if your home is worth $400,000, lenders combine your existing mortgage and new loan up to 80% to 90% of value, meaning total debt of $320,000 to $360,000. Subtract your current mortgage balance to see how much you can borrow. The calculator does this for you and warns when the debts you listed exceed the available equity.
Will this hurt my credit score?
In the short term, slightly: the lender does a hard credit pull and you are adding a new account. In the medium term it usually helps because paying off credit cards dramatically lowers your credit utilization ratio, a major scoring factor. The net effect after 6 to 12 months is typically positive if you do not run the cards back up.
Is the interest tax deductible?
Only if the loan proceeds are used to buy, build or substantially improve the home that secures the loan. Using a home equity loan to pay off credit card debt does not qualify under current tax law, which has applied since the 2017 Tax Cuts and Jobs Act. The interest is still far lower than credit card rates, but you do not get the tax break unless you are using the money on the home itself.
Why does my monthly payment drop but my total interest go up?
Because the new loan runs longer than your current debts would. Spreading a balance over 15 or 20 years at a low rate can still cost more than paying it off in 4 years at a high rate. The calculator flags this case and shows the keep paying your current total scenario, which is the usual fix: take the lower rate, but keep paying what you pay today so the loan is gone in a fraction of the term.
What if my home value drops after I take out the loan?
You would end up underwater, owing more than the home is worth. This does not directly trigger any action; you keep making payments and the loan remains in good standing. The risk shows up if you need to sell or refinance before values recover, since you would need to bring cash to closing to cover the gap. This is a real risk in volatile markets and is part of why borrowing close to your equity limit is dangerous.
What is the alternative if I have good credit but no home equity?
Switch the loan type above to a personal loan or debt consolidation loan; today's MBR average personal loan rate is 10.88%. Other options are a 0% balance transfer credit card with a 12 to 21 month promotional period, or simply aggressive payoff using the avalanche or snowball method. None of these put your home at risk. A cash out refinance is another route, but at today's average 30 year mortgage rate of 6.71% it resets your whole mortgage, so compare it carefully with a second lien.
Do consolidation loan rates differ by state?
Yes. MonitorBankRates computes average home equity, HELOC, personal loan and credit card rates for every state from the rates banks and credit unions in that state publish, and the spread between states can be a point or more. Pick your state above to load its averages and the local median home value for the equity check.
