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Many homeowners often take an opportunity to refinance their mortgage in order to receive a more favorable interest rate that results in a lower monthly payment. Did you know that you could also refinance a large credit card debt to make your debt payments more manageable? There are actually quite a few ways to achieve this. If you have a large credit card debt you would like to get better control of, consider one of the options below.
Debt consolidation works best when you have balances on multiple credit cards. By combining all your debts into a single debt, you wind up only having to make one payment per month rather than multiple payments. Of course, the payment may be significantly higher, but if you consolidate your debt at a low-interest rate, eliminating your high-interest rate credit cards, you could save a significant amount of money and ultimately pay off your debt quicker.
Or, you can transfer your current credit card balances to a low-interest rate credit card.
By transferring your high rate credit card balances to a lower rate, or even better, a 0% interest credit card, you can successfully consolidate your debt and save money by paying less interest each month.
If you have a good credit score, you should not have any issues securing a 0% balance credit card. However, be sure to read all the details—most credit cards only offer 0% interest on balance transfers for a specific time period, such as 12 or 18 months. After the promotional time period expires, the remaining balance will be subject to interest. You can check out more of the best credit cards for your credit score here.
Another way to refinance your credit card debt is to take out a personal loan. Many reputable companies offer personal loans at interest rates that are much lower than credit card interest rates. The better your credit score is, the lower interest rate you can receive. You can then use your personal loan to pay off the credit cards, and subsequently make one monthly payment to pay off the loan at a fixed interest rate over a fixed period of time.
Local credit unions may also offer low-interest personal loans. Be sure to research every company you are considering thoroughly before making a final decision on a personal loan.
Whichever option you choose for refinancing your credit card debt, remember to first determine if the option is feasible, saves you money over time, and actually helps make paying off your debt more manageable.