You rolled the cards into one loan, or you are close to doing it. The new single payment is smaller than the pile of minimums you send now. That relief is real for the monthly budget. This post is about the other number on the screen, the one people scroll past.
Why the month gets cheaper
A card balance is usually paid down over a few years. A mortgage or a cash-out refinance is paid over many years. When the card balance moves into the longer loan, the same dollars get spread across many more payments, so each payment is smaller.
Interest is charged every month a balance is still owed. More months means more months of interest. A lower rate on the new loan pulls total interest down. A longer term pushes it back up. Which side wins depends on your debts, and the Lifetime Interest Difference line is the tab's answer for your numbers.
Fill the tab so the lifetime line is honest
The tab opens with sample rows already filled in: a first mortgage, a HELOC, and two cards. They are placeholders. Before you read any result, make the rows match your debts.
Open the Debt Consolidation calculator and work through each row:
- Debt type. Pick the type from the menu at the top of the row. Remove any row you would not roll in. Use + Add Another Debt for each card or loan you would.
- Balance. The balance from your latest statement.
- APR / Rate. The APR printed on that statement.
- Payment Type. For a card, choose "Use actual/min payment."
- Monthly Payment. What you actually send each month on that debt.
- Remaining Term (years). How long that debt would take to clear at what you actually send. More on this one below.
- Balloon / Reset Due (years, if any). Leave it at 0 for a card or any debt with no balloon or reset. For a HELOC or other debt where you pay interest only, enter the whole years until the draw period ends or the payment resets. The sample HELOC loads with 1, so set it to match your real reset date, or remove the HELOC row if you would not roll it in.
Then, under If You Consolidated:
- New Single Rate on Consolidated Loan. The rate on your own quote. Whatever sits in the box when the page loads is not your rate, and it is not a BankPricer rate.
- Consolidated Loan Term. Pick 30, 20, 15, or 10 Years to match your quote.
The field that drives the lifetime line
On a card row set to "Use actual/min payment," the Monthly Payment you type sets today's payment in Current Combined Payments. The card's lifetime interest comes from somewhere else. The tab works it out from the Balance, the APR, and Remaining Term.
So Remaining Term has to be true. If your card would really take many years to clear at the minimum and the row says fewer, the tab undercounts what the card costs you as it stands, and consolidating looks worse than it is. If the row says more years than reality, consolidating looks better than it is. Leaving the field at whatever it loads with is a guess, and the lifetime line inherits that guess.
Most card statements include a box showing how long payoff takes at the minimum payment. If you send more than the minimum, your real time is shorter than that box says. The field takes whole years, so round to the nearest one.
Two more rows deserve a look. If the first mortgage row stays in, its balance joins Total Debt and gets re-amortized at the new rate over the new term. That changes both the Consolidated Payment and the lifetime line, often by a lot. Keep it in only if your plan really refinances the first mortgage, as a cash-out refinance does. If the first mortgage would stay where it is, remove that row. And a HELOC row set to interest-only counts interest for its whole Remaining Term with no principal paid down, so give it the term you actually expect.
Reading the lifetime line
The line shows a dollar amount followed by one word. "saved" means the debts you entered would cost less total interest as one loan than as they stand. "more" means consolidating costs more total interest than keeping the debts as they are, even when the monthly payment drops.
Under the results sits a box titled What this means. Before it looks at the monthly savings, it checks one thing. If any row has Payment Type set to "Interest-only / HELOC" and Balloon / Reset Due at three years or less, the box shows a warning instead: that row has a reset coming up soon, and the monthly savings may understate the real issue. The sample HELOC row loads that way, with Balloon / Reset Due at one year, so on first load you see the warning, not "Worth exploring."
When no row trips that check, the box reads the monthly savings. When the monthly drop is big enough, it calls the move "Worth exploring." Either way, it never looks at the lifetime line. You can see "Worth exploring" in that box while the lifetime line above it ends in "more." That gap is the reason to read the lifetime line yourself.
A "more" result is not automatically a mistake. Some people take that trade on purpose because the monthly room matters more right now. That is your call to make. Make it knowing the number.
Flip the term and watch both lines
Consolidated Loan Term is a dropdown. Change it one step at a time, and after each change read Consolidated Payment and Lifetime Interest Difference together.
A shorter term usually raises the payment and lowers total interest. There may be a term where the payment still fits your budget and the lifetime line looks better than it did at 30 years. There may not. Write each pair down as you go.
If you keep the longer term, paying extra on the new loan each month is a separate way to cut total interest, and the Extra Payments tab shows what that does.
What the tab cannot see
The tab has no closing costs field and no fees field. Lifetime Interest Difference is interest only. A refinance or cash-out comes with closing costs, and they are not in either line. If those costs get rolled into the new loan, the real balance is bigger than the Total Debt the tab shows.
The interest figures also assume each debt runs its full Remaining Term at the APR you typed, and the new loan runs its full term at the rate you typed. No extra payments. No new card balances. If the cards fill back up after they are paid off, none of that new interest shows here.
One more thing changes that no line shows. Once the cards are paid off this way, that balance is part of a loan secured by your home.
A second pair of eyes
Bring your run. We can go through your rows together, starting with the Remaining Term on each card and whether the first mortgage belongs in the tab. Then we can set your lifetime line next to the closing costs on a real quote before you decide anything. I work out of Chicago, and a phone call works as well as a table.
A calculator result is not a commitment to lend.
Jeff Shin, NMLS 1041652. Barrett Financial Group, L.L.C. Chicago. Company NMLS 181106. Equal Housing Lender. Not a commitment to lend.