Options for Credit Card Debt

Refinancing Credit Card Debt

When you’re buried in credit card debt, it can seem like a helpless situation, but fear not, because you’ve got options. Refinancing credit card debt is one of the fastest ways to get your head back above water, and is a process that allows you pay off your existing credit card debt by taking out a new loan.

When you refinance credit card debt, your debt isn’t wiped out, but simply transferred to a new loan, oftentimes with new conditions (like a new interest rate, new loan term, and new payment schedule).

Sometimes, refinances can reduce your monthly payments, making it significantly easier for you to get those sent in on time and avoid late fees or even defaults. The objective of refinancing your credit card debt is to secure a better debt situation than the one you’re currently in.

Count All of Your Debt

Do you owe money on a car, electronic, student loans, etc.? Take an inventory of all of your debt, including the amount of money you owe on all of your credit cards. These days, most Americans are carrying a significant amount of debt on their credit cards, which makes consolidation and refinancing an attractive option.

Debt consolidation is the process of taking multiple loans and combining them into a single new loan, allowing you to simplify the process of getting out of debt, since you’d only have one payment to one lender. It’s only worthwhile to consolidate loans that have high interest rates, or which have higher interest rates than what you’re being offered for the new consolidation loan, so be careful about signing up for any and all debt consolidation offers. Read more at https://www.creditkarma.com/credit-cards/i/ways-to-consolidate-credit-card-debt/.

Budget

Budgeting is the key to making any credit card debt refinance work in the long run. Once your debt has been refinanced, you’ll still need to keep up with monthly payments, and setting an effective budget is the best way to do that.

When creating your budget, start by using pay stubs and credit card statements to help figure out how much you’ve been earning and spending each month. Determine where you can make cuts on nonessential expenses, and allocate whatever money you’re able to save toward paying off whichever debt of yours has the highest interest rate.

When looking to refinance your credit card debt, be sure to get quotes from a few different lenders, so you can compare interest rates, then choose the option that’ll save you the most money over time.

Possible Penalties

Paying off your current debt in one lump sum may come with pre-payment penalties, so be sure you won’t be hit with excessive fees by pursuing a refinance or the process could end up costing more money than it saves.

These penalties should be expressed in your initial credit card contract, but if you can’t find them yourself, then call your lender to ask if any fees would apply should be pursuing a consolidation or refinance. When calculating whether or not the refinance process will save you money, don’t forget to include the number of fees that you’ll be facing.

Seek the Best Lender

Start looking for a lender who’s willing to combine your debts and offer you the lowest possible interest rate. Most people start by checking out opportunities online since it’s faster, doesn’t require travel, and allows you to collect details without a lot of logistical headaches, but sometimes the best deals are only available in person.

Pick an ethical lender who has been in the business for a while, has positive consumer reviews, and excellent customer service, not just whoever offers the lowest rates. You get what you pay for so don't short yourself.

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