Credit card refinancing may be an option for getting you out of debt faster. Is it the right choice for you? This guide will help you decide.
Credit cards are great handy tools that allow one to pay for anything instantly without cash or checks. While some Americans hate credit cards, others love them. However, about 55 percent of people with credit cards have debt.
Using credit cards can quickly morph into a liability, especially if you cannot make your monthly payments. If you have a credit card debt, it is time to plan to get out of that debt and regain control of your finances.
There are several ways of getting out of debt, and credit card refinancing is one of them. Read on to find out more about this option and the benefits that it can offer you.
What Is Credit Card Refinancing?
If you have several credits cards, at times, one of the cards you use will offer interest-free periods as a promotion. The banks make such offers for balance transfers for a specific period, mostly 12 to 18 months. You can also get a credit card company with an introductory rate offer of zero percent APR on the balance you transfer.
Credit card refinancing is all about taking advantage of such low-interest rate transfer offers. It allows you to transfer your credit card balances to one card that offers a lower interest rate or an interest-free grace period. This is a simple way of lowering your monthly interest payments.
The main aim of refinancing is to take another loan that offers better terms than those of your existing loans. You will use this loan to pay off either one or more credit card loans.
Check out how to get a financier who is immediately available despite your credit card score.
Benefits of Credit Card Refinancing
The major benefit of credit card refinancing is using that chance to pay off your debt with little or no interest in the first year or whenever the promotion ends. This is a very effective strategy if you can pay off a huge chunk of your debt within that time.
According to Bankrate data, the average credit card interest rate is almost 17.4 percent APR. This means paying zero interest for a year or more on the balance that you have transferred can help you save big time.
While transferring your balance is a great way of refinancing your debt, you have to be sure that you can pay off the amount you have borrowed within the given period. If you don’t, you will end up paying very high-interest charges, which could be more than 25 percent APR.
A good strategy would be to divide the total amount you owe on the new card by the repayment period given with zero interest. Moving your credit card debt to a credit card financier who offers a zero percent interest rate will save you, especially if you have been given a high credit limit to refinance all your debts.
Consider Credit Card Refinancing to Pay Off Your Debt
While credit card refinancing gives you the power to decide the amount to repay each month, try to ensure that you do not incur any more credit on your new card. This means changing your spending patterns.
Apart from being debt-free, there are other things you need to live a fulfilling life. Our blog has numerous articles with tips on how to improve the quality of life. Please check out the various categories, from entertainment to health and grooming.