Choosing between credit card refinancing and debt consolidation will largely depend on your specific financial situation. Both can be a good way to manage your credit card debt, but which one you choose should depend on what kind of deal and interest rate you can get.
Credit card refinancing refers to transferring your debt on a specific credit card over to a new card with different terms and interest rates. Your new card could be with the same company, or you can transfer your debts to a new credit card entirely. People choose to refinance their credit card debt when they can get a better interest rate or better terms on a new credit card. Keep in mind, that many cards will charge you a balance transfer fee when doing this.
Debt consolidation is another option when your debts become increasingly unmanageable. This is the process of taking out one large personal loan to pay off several other smaller debts. Debt consolidation can be used to pay off pretty much any type of debt including credit card debt, student loan debt, or personal loan debt. There are a couple of main reasons why borrowers choose to consolidate their debts.
First, consolidating your debt makes your monthly budgeting and financial planning much easier. After all, it’s easier to focus on one monthly loan payment rather than several. If your current loan payments are difficult to keep track of, then you may be able to simplify your finances by consolidating. The other main reason to consolidate your debts is that you may be able to save money. If your new loan has a better interest rate than the average interest rate of your other loans, then you’ll save money in the long run.
So the question remains, should you choose to refinance your credit card or consolidate your credit card debt? As we mentioned, it will mostly depend on what kind of deal you can get. If you can consolidate your debts with a low interest rate then that may be the best option. But if you can get a better deal by refinancing, then that is the way to go.