The Pros and Cons of Credit Card Refinancing
If you’re considering refinancing your credit cards to get a better interest rate, there are a few pros and cons to consider. Today, we’re going to dive in and tell you all you need to know about the good and bad surrounding credit card refinancing so you can make a decision that suits your needs best.
Save On Your Interest Payments
One of the main reasons that people choose to refinance their credit cards is to save on their interest payments. A credit card with a 0% APR will mean savings for you. Even if your super low interest rate has an expiration date, this still rings true.
Most often, introductory rates like this will last anywhere from 12 to 18 months. The great thing about these low interest periods is that you can make significant payments to get out of debt. You may even want to try and eliminate any debt before your higher interest rate starts up.
Flexible Repayment Options
Credit card refinancing is very open-ended with its payment requirement compared to other interest rate saving methods, such as debt consolidation. Each month, you will be given a minimum payment that you have to make. However, beyond that, you have the ability to pay as much or as little as you choose.
For example, if you have very tight finances, refinancing your credit cards could be a great option to give you the necessary breathing room.
The Inevitable Interest Spike
Note that your introductory interest rate will not last forever when you get your balance transfer.
Eventually, the institution that issued you your credit card will increase your interest rate. This is important to know, as credit cards have notoriously high interest rates. When your introductory period comes to an end, you should expect your interest rate to be relatively high.
The Cost
When you transfer your balance over, you’ll typically have to pay a fee. The average range of a balance transfer fee is anywhere from 3% to 5%, which can be a pretty significant cost depending on your circumstances.
Final Thoughts
Credit card refinancing is one of the best methods for managing your debt efficiently. If you’re someone who is struggling with credit cards that have high interest rates, you may consider refinancing your credit card to eliminate your debt quickly.
When you’re feeling good about being on track with your debt, you may consider looking into ways to boost your credit score.
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