Tips For Refinancing Your Credit Cards
What are credit card refinancing and how can it benefit you? Credit card financing is when you take out a new credit card that has a lower interest rate and pay off your old ones. This gives you the opportunity to save money. How can you do this? Credit card refinancing is just a method of transferring a current credit card balance to another card with a more favorable lending structure.
For example, if you currently have a high credit card interest rate of around five percent, and are planning to apply for a debt consolidation loan, you can get lower rates by refinancing. In this case, you could save up to eight percent a year, or even $800, depending on the current interest rate. This would be particularly beneficial if you have lots of high interest rate debts. If you have a lot of debt, credit card refinancing will definitely pay off in the long term.
A second popular way to achieve lower interest rates with credit card refinancing is to change your repayment periods. Most lenders will look at the period you plan to pay your loans and evaluate how long it generally takes for you to pay off the balances. They also will consider how long you have been paying your current balances and calculate your potential savings. Lenders typically prefer borrowers who take longer to pay their debts. Therefore, in the event you plan to keep your current terms, they will generally approve you for a longer period of time in which to keep your balances.
You could also use credit card refinancing to pay off smaller debts without a loan. If you have several small credit cards that carry balances on them, you can likely reduce these balances without having to refinance or consolidate them. Some of these cards may already have low interest rates associated with them.
You can also use credit card refinancing as part of a debt consolidation program. However, it is not uncommon for this type of arrangement to end up costing more money than it saves. For this reason, some personal loan companies will not work with borrowers who are interested in credit card consolidation. Instead, they usually provide money for personal purposes. If you are interested in obtaining a personal loan to help pay off your credit card consolidation obligations, then you will want to obtain a bad credit loan from a lender that specializes in this type of lending.
A third way that credit card refinancing could help you lower your interest rate is by lowering your total amount you need to pay toward your loan balance. Some lenders will loan you more money than your average credit card debt pays off. If you owe ten thousand dollars on your credit card debt and you obtain a twenty thousand dollar loan, your monthly payments could go down from ten thousand dollars to eight thousand dollars.
Before you obtain credit card refinancing in order to obtain a personal loan to pay off your debt consolidation obligations, make sure you consider the fees involved with this option. Remember, these fees can add up quickly and can cause you a lot of extra financial stress. If you decide to take out a personal loan to pay off your credit card debt, be sure to do your homework so you don’t end up with a higher interest rate than you would have if you had obtained an unsecured personal loan.
Finally, when you obtain credit card refinancing you will typically be able to choose whether or not you will be making one monthly payment, two payments, or three payments. In many instances, a person will obtain one lower interest rate, but will have to end up paying off the same amount each month. This is why it is typically better for people to obtain a lower interest rate to start out with and only use the balance transfer option if they find that the one interest rate is not enough to cover their needs.