“What credit card refinancing options do you recommend?”
November 17, 2017
by Saundra Davis
What are some credit card debt refinancing options you recommend?
Submitted by anonymous.
My favorite approach to debt reduction is a payment plan. It helps you reduce interest by paying the debt in a way that works within your budget. A payment plan also minimizes the risk of consolidating, which can incur additional debt.
If you decide that refinancing or consolidation are best for you, here are a few options to consider:
- Balance transfer to a 0% rate card: This seems easy enough, but there are some factors that you should think about:
- Are you opening a new credit account or using an existing card? New accounts impact your credit score, so think about this before taking this step.
- Can you manage your spending and avoid increasing your overall debt? If you pay off one card by using another, how will you manage that “open” line of credit?
- Consolidation loans: This can be a good choice, but watch those interest rates AND be sure you have a spending plan that helps you stay on track so you don’t continue to use the cards you paid off.
- Home equity lines: This is NOT a good option. Credit card debt is “unsecured,” which means you don’t lose any collateral (an asset that the creditor can take if you don’t pay), but if you use a home equity line to consolidate, you put your home at risk by “securitizing” the debt.