How to Refinance Credit Card Debt (and Pay It Off Faster)

Word to the wise: the sooner you’re able to pay it off, the better.
Updated Sept. 12, 2023
refinance credit card debt fast

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Credit card debt refinancing is a strategy used to reduce the total amount of interest you pay on your credit card balance. Using this strategy means transferring your balance from a credit card with a high annual percentage rate (APR) to a card, loan, or another option with a lower APR or interest rate.

Refinancing credit card debt can be a great tool for handling a growing credit card balance. You may have an easier time paying off your debt when you use it the right way. However, it may not be the right tool for every situation.

In this credit card debt refinancing guide

What is credit card debt refinancing?

When you refinance credit card debt, you simply pay off a credit card with a high APR using another credit card with a lower APR. You can also use an unsecured personal loan with a low interest rate or get help from a credit card debt service, among other options.

For example, you may have a credit card with a 26% APR. This high APR can increase the difficulty of paying off your credit card debt. Transfer your credit card debt to a credit card with a 16% APR or a loan with a 12% interest rate, and you may have an easier time paying off your debt.

That’s because the lower APR or interest rate puts more of your payments toward the principal amount you owe rather than the interest you are charged.

Keep in mind
You can opt for a personal loan, a home equity loan, or a debt relief service if paying off your credit card debt by opening another credit card worries you.

A balance transfer credit card could help you transfer existing credit card balances to a new card with a lower APR. Some credit cards even offer 0% intro APR for a limited time. This could allow you to save money on interest and pay off your debt faster.

Card name Intro APR Balance transfer fee Annual fee
BankAmericard® credit card
  • 0% intro APR for 21 billing cycles for any qualifying balance transfers made in the first 60 days (then 16.24% - 26.24% Variable APR)
  • 0% intro APR on purchases for 21 billing cycles (then 16.24% - 26.24% Variable APR)
3% of the amount of each transaction $0
Wells Fargo Reflect® Card
  • 0% intro APR for 21 months from account opening on qualifying balance transfers, then 18.24%, 24.74%, 29.99% variable APR
  • 0% intro APR on purchases for 21 months from account opening, then 18.24%, 24.74%, 29.99% variable APR
5%; min: $5 $0
Wells Fargo Active Cash® Card
  • 0% intro APR for 15 months from account opening on qualifying balance transfers, then 20.24%, 25.24%, or 29.99% variable APR
  • 0% intro APR on purchases for 15 months from account opening, then 20.24%, 25.24%, or 29.99% variable APR
3% for 120 days from account opening, then up to 5%; min: $5 $0
Capital One Quicksilver Cash Rewards Credit Card
  • 0% intro APR for 15 months on balance transfers, then 19.99% - 29.99% (variable) APR
  • 0% intro APR for 15 months on purchases, then 19.99% - 29.99% (variable) APR
3% fee for the first 15 months. No fee for amounts transferred at the Transfer APR $0
Citi® Double Cash Card
  • 0% intro APR on balance transfers for 18 months, then 19.24% - 29.24% (Variable)
3% of each balance transfer ($5 minimum) within 4 months of account opening; then 5% of each transfer ($5 minimum) after the 4 month intro period ends $0

One of the methods to restructure your credit card debt is by getting help from specialized credit card debt services. These services typically offer relief in the form of debt consolidation or settlement. Here are our recommended debt relief services and how they compare.

Company Fees Minimum debt Learn more
National Debt Relief 15% to 25% of the total debt enrolled $7,500 Visit National Debt Relief
Freedom Debt Relief1 15% to 25% of the total debt enrolled $7,500 Visit Freedom Debt Relief
ClearOne Advantage2 20% of the total debt enrolled, on average $10,000 Visit ClearOne Advantage
JG Wentworth4 18% to 25% of the total debt enrolled $10,000 Visit JG Wentworth
Accredited Debt Relief3 15% to 25% of the total debt enrolled $10,000 Visit Accredited Debt Relief

Get Out of $30,000 or More of Credit Card Debt

Learn More

How to refinance credit card debt

As for how to refinance credit card debt, there are several different ways to do it:

When deciding the best option, think about your credit history, cash availability, income level, and debt size. You can also decide based on whether you want to lower monthly payments or pay off debt quickly.

Each of these options has both advantages and disadvantages. Let’s explore all of them so you can decide which approach to refinancing credit card debt is best for you and your situation.

Use a balance transfer credit card

  • No need to pay interest if you qualify for 0% intro APR
  • Transfer amounts can’t be higher than the available credit limit
  • Typically has a balance transfer fee
  • You may not qualify if you have a low credit score

To save on interest, consider a balance transfer to a credit card with a lower APR. Ideally, you want a card that offers over a year of introductory 0% APR, providing a period in which it charges you no interest. 

There may be a time frame for when you can qualify for the 0% intro APR. For example, a card may stipulate that the cardholder needs to make a balance transfer within 45 days of account opening to qualify for the 0% intro APR. 

And even if you don’t qualify for a 0% intro APR credit card, it’s still possible to refinance credit card debt by finding a card with a lower APR. Even if it’s a slightly lower APR, it could save you a lot of money over time.

Keep in mind
Many card issuers charge a balance transfer fee, which is usually around 3%. Some cards also charge an annual fee, so you’ll want to figure out if it’s worth it to fork over the cash before you apply for the card and pay the transfer fee.

This method is ideal for people with a small amount of debt that can be paid off within a year. You can only transfer a limited amount, typically up to your new credit limit. If you can't transfer all your debt, prioritize the debt with the highest interest rate.

To find the best credit card for you, check out our list of the best balance transfer cards. Be sure to take note of the recommended credit score needed to qualify.

Consider a personal loan

  • You’ll have a longer time to pay off debt
  • Rates may be lower than a credit card
  • Some lenders may charge an origination fee
  • The lowest rates are reserved for those with excellent credit

A personal loan allows you to borrow an amount of money to consolidate your credit card debt. These types of debt consolidation loans typically offer a lower interest rate than your credit card. However, you may need to have good credit for loan approval and excellent credit to qualify for the best rates.

Keep in mind
Some lenders also charge borrowers what’s known as an origination fee, which you’ll need to pay for the privilege of taking out a personal loan.

Getting a new loan can be a form of credit card refinancing and debt consolidation into one loan term, which can help you manage payments. If you have a lot of credit card debt, this could be a great option, as it might help you get more organized and have a lower and potentially fixed rate.

Using a credit card consolidation loan can also help when you have a large amount of credit card debt. Personal loans typically allow you to borrow a few thousand to several thousand dollars, enabling you to move several high-interest credit card debts to your loan. 

However, if you plan on paying off your debt in less than five years, you might be better off using a balance transfer credit card with an APR introductory period. That’s because you may pay more for a personal loan if your lender charges an origination fee plus an interest rate.

Borrow Up to $35K with Flexible Terms

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How to use a personal loan for credit card debt refinancing

Figuring out how to get a personal loan to refinance your credit card debt can be outlined in four steps:

  1. Compare lenders: Consider your options by shopping around for the best personal loans that offer low interest rates and favorable repayment terms. You can find out your personal loan options online or at your local bank or credit union.
  2. Apply for a personal loan: Submit an application for the personal loan you chose by specifying the amount you want to borrow and providing your name, address, Social Security number, employment information, income, and recurring expenses.
  3. Use the loan to pay your debt: Decide how to receive the money you borrow, then if approved, use it to pay off your credit card debt. Any remaining funds from your loan should go toward your first loan repayment to reduce your principal amount.
  4. Make on-time loan payments: Be vigilant about making your monthly loan repayments on time. Any late payments can negatively impact your credit score and ability to borrow money in the future. If possible, set up automatic payments to ensure you never miss a payment.

Use your home equity

  • Rates are typically lower than credit cards
  • Can borrow large sums of money
  • You could lose your home if you fail to make payments
  • The best rates go to those with the high credit scores

If you own a home, you can tap into your house's value and take out a home equity loan or home equity line of credit:

  • A home equity line of credit (HELOC) is similar to a credit card. You can borrow up to a certain limit, and during the draw period, you only pay interest on the amount you borrow. Once the draw period ends, you'll need to repay the entire loan amount, including the principal.
  • A home equity loan, on the other hand, gives you a lump sum loan amount with a fixed interest rate, and you pay it back in an agreed amount of time. Both types of loans allow you to use that money to pay off your credit card debt.

A home equity loan or HELOC is a good option if you have a lot of credit card debt to refinance and want to pay it off over a long period of time, typically 10 or more years. As these loans are secured loans, the money amount you can borrow depends on your home equity.

You risk losing your home if you can’t keep up with payments.

To calculate your home equity, subtract how much you owe from your home's current value. For instance, if your home is valued at $250,000 and you still owe $175,000, you have $75,000 worth of home equity. Lenders use this number to determine your borrowing limit, which is usually up to 85% or up to $63,750, using the above example.

Keep in mind that the lowest rates of interest tend to go to people with the highest credit scores. 

Shop around at your local credit union or bank to find the best rates. There are also plenty of online lenders, which sometimes offer better rates.

Borrow money from your 401(k)

  • No soft or hard credit pulls to secure the loan
  • Rates may be lower than credit cards
  • The interest you pay goes back to you
  • May impact your retirement
  • Potential tax implications
  • Need to pay back the loan in five years

You may consider borrowing money from your 401(k) if you have bad credit and can't qualify for any other option. Borrowing money from your 401(k) might not be the best choice when it comes to refinancing or consolidating credit card debt due to its potential consequences. But in some cases, it might help.

A 401(k) loan doesn’t require you to have established creditworthiness, and rates may be lower than credit cards, though that depends on your employer-sponsored plan. One major benefit is that the interest charges you pay go back to your retirement account, so you wouldn't be paying a bank or a financial institution.

However, you might impact your retirement, especially if you don't pay back the money you borrow. There might also be tax implications. If you’re younger than 59.5 years old, you would typically pay taxes and penalties on the funds you borrow and don't pay back.

Keep in mind that you’re only permitted to borrow up to 50% of your 401(k) account balance, up to $50,000. The IRS also requires you to pay back the loan in five years. In some cases, you might be limited to taking out a single loan against your 401(k) plan at a time. If you do go this route, talk to your 401(k) provider to find out how you can take out a 401(k) loan and make sure to fully understand how the loan works.

Consider a debt management plan

  • Someone helps negotiate lower rates or monthly payments on your behalf
  • You make a single payment, and the credit counseling agency takes care of the rest
  • There may be fees to use this service
  • Not all organizations are created equal

There is no shame in asking for help. If you owe a lot in credit card debt and can’t seem to keep up, consider credit counseling. Nonprofit organizations can help you create a debt management plan and work with your creditors to create a financial plan to pay back your loans.

Typically the way a debt management plan works is that you deposit money with the credit counseling organization, and they use that to pay your creditors. There are usually fees for this service, which can include an ongoing monthly and set-up fee.

Using a debt management plan could be worth it if you don’t trust yourself to make on-time payments and you want someone to negotiate lower rates and follow a set payment plan on your behalf. In many cases, these organizations can help you negotiate lower monthly payments or bring down higher interest rates and pay off your debt within 36 to 60 months.

If you decide to go this route, be sure to thoroughly vet your options. Search for one that is accredited by the National Foundation for Credit Counseling (NFCC). Sadly, there are some shady organizations out there, so be sure to research your options before committing.

Use a specialized credit card debt service

  • Credit card debt services may help you get away from high interest
  • You typically get a fixed interest rate
  • Depending on the service, it may end up costing more than some other options
  • Some services, such as Tally, may require credit scores above a certain limit

There are credit card debt services that specialize in helping people manage their credit card debt. Tally is one of these services. 

To use Tally, you need to qualify for its credit line, which requires a minimum credit score of 660. During this application process, Tally does a soft credit inquiry that won't affect your credit score. It analyzes your debt balances and APRs to figure out the best way to help you pay down your credit card debt.

Learn more in our Tally review.

Once approved, Tally moves your high-interest debt to a new line of credit. If you link credit cards with a lower interest rate than Tally's credit line, Tally pays their minimum payments. You can also turn off this feature and pay the credit cards through the app or directly with the issuer.

Tally sends one monthly statement with a minimum payment due that includes interest on the credit line, payments to card issuers, and 1% of the credit line balance to reduce the overall balance.

How to pay off credit card debt faster

Paying off credit card debt faster can be done through a combination of lowering interest rates, increasing your monthly payment amount, and making more payments. If possible, stop using your credit cards to avoid racking up more debt.

Adding more money to your debt repayment is as simple as making extra payments. Start tracking your income to understand where your money goes each month to see where you can cut back and apply the difference toward your debt. If you’re ambitious, consider dedicating a few hours a week to one of the best side hustles that fit your schedule.

You can also use debt reduction strategies like the debt avalanche method and the debt snowball method. This can help when dealing with different types of debt, like auto loans or student loans.

  • The debt avalanche method involves prioritizing debt with the highest interest rate, giving you a faster and cheaper way to pay off debt.
  • The debt snowball method involves prioritizing debts with the smallest dollar amounts, giving you a quicker way to reduce your number of accounts with open balances.

As long as you have a solid plan in place and are committed, it’s possible to figure out how to pay off debt faster.

Credit card debt refinancing vs. consolidation

Credit card debt refinancing Credit card debt consolidation
  • Can be simple to figure out, especially when tackling a single debt
  • Often entails using a credit card with 0% intro APR for a limited time, most commonly 12 to 15 months
  • Often involves a balance transfer fee between 3% and 5% of the amount transferred
  • May include several credit card accounts, adding complexity to the process
  • Often entails combining outstanding credit card balances into one account, most commonly paid back over 3 to 5 years
  • May use a personal loan that comes with an application fee or origination fee.

Credit card debt refinancing is one of several ways Americans can tackle their debt. Another common method is known as credit card debt consolidation. This method is most often used to reduce the number of outstanding balances a person has by paying off their credit cards using one credit card, personal loan, or other means.

Credit card debt refinancing shares many similarities and a few differences with credit card debt consolidation. Credit card debt consolidation combines or consolidates your credit card debts by paying them off with a loan or other means, so you only have one monthly payment toward the debt payment method you used.

Credit card debt refinancing and consolidation can have slightly different goals:

  • Credit card debt refinancing: Often used to pay less in credit card interest charges.
  • Credit card debt consolidation: Often used to simplify your credit card bills by combining them into a single bill.

Learn more about the differences between credit card debt refinancing versus debt consolidation.

Is refinancing credit card debt a good idea for you?

Credit card debt typically comes with higher interest rates than other types of loans. Sticking to the minimum payments means you might pay much more in interest charges.

High credit card balances also lead to a high credit utilization ratio, which can damage your credit score and make it harder to get better interest rates.

Refinancing or consolidating your credit card debt may be a good idea, regardless of whether you have excellent or fair credit. This can help you save thousands of dollars in interest payments over the life of the loan.

However, before you refinance, assessing whether it will improve your financial situation is important. For instance, taking out a home equity loan can lead to losing your home if you fail to make repayments on time. Alternatively, a personal loan with an origination fee can incur higher costs.

Credit card debt refinancing can be a good idea if:

  • Your credit card is charging you a high APR, and you may get a lower APR or interest rate by refinancing your credit card debt
  • Your credit score is good enough to qualify for a lower APR on another credit card or a lower interest rate on a loan
  • Your credit score may benefit from lower credit card utilization by increasing your total available credit when you open a new credit card

Credit card debt refinancing may be a bad idea if:

  • You don’t remember to pay your bills on time since opening another credit card may add to the problem rather than help
  • You can’t qualify for a 0% intro APR or low APR credit card, or a low-interest loan
  • You may pay a balance transfer fee high enough to eliminate or minimize the benefits of refinancing your credit card debt
  • You won't be able to pay off the card by the time the introductory 0% APR ends

Alternatives to refinancing credit card debt

There are several alternative options to credit card debt refinancing you can consider, including debt settlement, debt management, and bankruptcy.

Seek debt settlement

In some cases, a lender may be willing to settle your debt for an amount lower than what you actually owe. Credit card companies may consider a debt settlement to ensure you don’t file for bankruptcy, which may eliminate the debt.

It may be worth trying this debt settlement method by contacting your credit card issuer and asking if they are willing to settle your debt for a lesser amount. Alternatively, you can also use a debt settlement company such as Freedom Debt Relief to benefit from its experience.

Find out more in our Freedom Debt Relief review.

Use a debt management plan

Setting up a debt management plan often begins by contacting a credit counseling agency that can help negotiate your debt and repayment terms. The agency can then establish a repayment schedule for you to pay off your debt.

Credit counseling agencies act as a middleman between you and your creditors. Sometimes, you may directly pay the credit counseling agency, and then it pays your creditors.

Credit counseling agencies can be both for-profit and nonprofit organizations. Even nonprofit agencies may charge small fees. When vetting your options, make sure to work with an organization accredited by the National Foundation for Credit Counseling (NFCC).

Consider bankruptcy

Consumer debt and credit data from the Federal Reserve Bank of New York showed that the average credit card debt delinquency rate increased in the fourth quarter of 2022. When all else fails, bankruptcy may be your only way to become debt-free, although it isn’t an easy option.

There are several pros and cons to bankruptcy, but instead of viewing bankruptcy as a failure, consider it a way to restructure your finances. It helps you discharge certain debts, stop collection calls and wage garnishments, and relieve yourself from financial stress.

Depending on your situation, you may qualify for Chapter 7 or Chapter 13 bankruptcy. Both bankruptcy types can help you move past certain debts. However, you may lose certain assets and damage your credit score for several years.

Chapter 7 bankruptcy typically liquidates some assets and allows you to discharge most unsecured debts, while Chapter 13 bankruptcy involves creating a repayment plan to pay off your debts over a period that normally lasts 3 to 5 years.

Credit card debt refinancing FAQ

Do balance transfers hurt your credit?

The effect of a balance transfer on your credit score can be positive or negative, depending on your exact situation. A balance transfer may hurt your credit score if you go past the due date or if you continue to accrue debt on your credit cards.

On the flip side, a balance transfer may improve your credit score if you make on-time credit card payments and use your credit cards responsibly. Additionally, opening a new credit card account increases your total credit, which may lower your credit utilization and improve your credit score.

Will refinancing my credit card debt hurt my credit score?

The impact of refinancing your credit card debt on your credit score depends on the refinancing method you use. Your credit score may take a hit when you apply for a new credit card or a personal loan since they require hard inquiries that go on your credit report. But your credit score should recover once you establish a positive payment history and successful debt reduction.

What happens if I don't pay my credit card debt?

When you stop paying your credit card debt, your credit card issuer will charge you late fees, your balance will increase in line with your APR, and your credit score will likely drop. The longer you don’t pay your credit card debt, the harder it may be to pay it off. Eventually, your credit card debt may be sent to collections, and you may be able to reach a payment plan with the collection agency.

Is it better to refinance or pay off credit card debt?

If you have the funds to pay off your credit card debt, it’s probably better than refinancing your debt since paying off your debt eliminates interest charges.

However, suppose you can refinance your credit card debt using a 0% intro APR credit card for a year or more. In that case, you may benefit from putting your money in a savings account, earning interest on your savings balance, and making the payments needed to eliminate your debt before the 0% introductory APR period ends.

How long does it take to refinance credit card debt with a personal loan?

The amount of time it takes depends on the lender and your personal situation, but generally, it can take anywhere from a few business days to a few weeks. Some factors that affect the time frame are:

  • How quickly you complete the personal loan application and submit the required documents, if any. These documents may include proof of income, bank account statements, or other documents.
  • How fast the lender verifies your information, which may include performing a credit check or reviewing documents you submitted.
  • How soon the lender approves your loan and disburses the funds to your bank account or to your creditors.

Make sure to compare credit card debt refinancing loan offers from multiple lenders and consult a credit counselor or a financial advisor before making any decision that affects your finances.

Credit card debt refinancing: bottom line

Credit card debt refinancing is a creative financing tool you can use to manage your credit card debt and pay it off over time. Credit cards with high APRs can be challenging to pay off because so much of your monthly payments go toward interest charges.

By refinancing your credit card debt to have a smaller APR or lower interest rate, you put more of your monthly payment toward the principal amount you owe. This should help you pay your balance off faster and get out of debt sooner.

National Debt Relief Benefits

  • No upfront fees
  • One-on-one evaluation with a debt counseling expert
  • For people with $7,500 in unsecured debts and up

Author Details

Sarah Li Cain Sarah Li Cain is an experienced content marketing writer specializing in FinTech, credit, loans, personal finance, alternative investments, real estate, banking, international business and travel. Her work has appeared in Fortune 500 companies, publications and startups such as Transferwise, Wordpress, Pearson Teachability and KeyBank.
Yahia Barakah Yahia Barakah is an Editor at FinanceBuzz and has created finance-focused content since 2011. He has a background in institutional investment and asset management, and he has a deep passion for financial literacy.