Mary Grace McCormick, Credit Writer
@mg_mccormick
The difference between credit card refinancing and debt consolidation is the number of accounts involved. Credit card refinancing usually involves one debt, while debt consolidation involves merging multiple debts. Both credit card refinancing and debt consolidation allow borrowers to reduce the cost of paying off existing debt by lowering the interest rate applicable to the debt, when done successfully. As a result, when you consolidate debt, you are technically refinancing it, too, assuming the terms are different from those of your original lender(s).
Both credit cards and loans can be used for refinancing or consolidation. However, when the terms “credit card refinancing” and “debt consolidation” are used together, they’re usually comparing a balance transfer credit card to a debt consolidation loan. So, for the purposes of this answer, “credit card refinancing” will refer to using a balance transfer credit card to reduce the cost of a debt, and “debt consolidation” will refer to combining multiple debts with a single loan.
Credit Card Refinancing Vs. Debt Consolidation
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Ultimately, the choice between credit card refinancing and debt consolidation comes down to your specific debt situation and credit score. Once you have made a decision, prioritize your monthly payment obligations and practice good financial habits to avoid future debt problems.
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People also ask
What is credit card refinancing?
Credit card refinancing is the process of transferring credit card debt to another lender’s credit card or loan, with the goal of saving money on interest and perhaps consolidating multiple balances into one. However, there is more than one way to go about refinancing credit card debt. The first is to do a balance transfer, where the debt gets moved to another credit card with a lower APR. The average 0% APR balance transfer period...
read full answer by WalletHub, Financial CompanyShould I get a credit card consolidation loan?
A credit card consolidation loan is a good idea if it reduces the cost of your debt and allows you to repay what you owe sooner than you would otherwise. Furthermore, a credit consolidation loan is the best choice if it will save you more than the top balance transfer credit cards.
Credit card debt consolidation loans help put all your balances in one place. But they’re not worth it unless you also get a reduced interest rate...
read full answer by Adam McCann, Financial WriterDid we answer your question?
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