Does combining loans save money?

A personal consolidation loan pays off existing debts and leaves one new debt. The new debt has its own APR, term, payment, and often an origination fee that is financed or taken from the proceeds. The fee means you may borrow more than the balances you retire. The APR on the loan is not comparable to a credit-card APR until both are run to the same payoff date with the same fees included.

The monthly payment can fall for two different reasons. The rate can be lower, which reduces interest. Or the term can be longer, which reduces the payment by spreading principal out and usually increases total interest. A quote that advertises the payment is not a quote of the cost. The cost is interest plus fees, and the date is the month the new loan amortizes to zero.

Cards left open can be charged again, so the new loan can sit beside a new revolving balance. Closing them changes utilization and account age in the file. That is a reporting effect, not part of the loan’s interest, and this overview assigns it no score change.

Avalanche and snowball remain available if you do not consolidate. They keep each contract’s APR. Consolidation replaces those APRs with one schedule. Compare the loan’s interest and fees with the card book’s interest under a stated extra payment. A lower payment from a longer term can be the more expensive path.