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.
Last updated Jan. 31, 2023 | By Sarah Li Cain | Edited By Yahia Barakah
refinance credit card debt fast

We may receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

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 a 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 specialized credit card debt service if paying off your credit card debt by opening another credit card worries you.


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 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 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 interest on your credit card debt.
  • Credit card debt consolidation: Often used to simplify your bills by combining them into a single bill.

Options for refinancing credit card debt

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

All of these options can work, but you’ll want to consider things like your credit score and credit history, how much cash you have on hand, your income, and your overall debt load. You also want to consider how motivated you are to pay off debt as fast as you can or if you need some help and would be better off with a slower plan that has lower monthly payments.

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

Consider a balance transfer if you can trust yourself with a new credit card without spending more money on it. Ideally, you want to find a card with an introductory 0% APR. This card type offers a period of time where you won’t be charged interest. Some of the best balance transfer cards offer over a year at the intro annual percentage rate.

There may be a time frame for when you can qualify for the 0% intro APR. For example, a card may have a stipulation that you, as the cardholder, need to make a balance transfer within 45 days of account opening to qualify for the 0% intro APR. Make sure to check the fine print when deciding on a new credit card, so you’re well within the requirements to get the introductory APR offer.

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 best for those who have a small amount of outstanding debt and can pay it off within a year or so. That’s because you’re limited in how much you can transfer over, which is typically up to your new credit limit. If you can't move all your credit card debt, you can still try to move the debt you are paying the highest interest rate on. 

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.

Pros
  • No need to pay interest if you qualify for 0% intro APR
Cons
  • 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

Consider a personal loan

A personal loan gives you the opportunity to borrow a certain amount of money so you can consolidate your credit card debt. These types of debt consolidation loans typically offer a lower interest rate than your credit card. However, you’ll likely need to have excellent credit to qualify for the best rates. 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.

Using a personal loan for debt consolidation can help you manage payments since you’re only making one payment instead of multiple ones. If you have a lot of credit card debt, this is a great option, as it’ll keep you more organized and paying at a lower rate. Since most personal loans allow you to borrow more, it’s best if you have a large amount of debt to pay off.

If you plan on paying off your debt in less than five years, a personal loan may not be the best choice. You may be better off using a balance transfer or making higher monthly credit card payments. That’s because you may pay more for a personal loan if your lender charges an origination fee plus an interest rate. By sticking with your credit cards, you also avoid taking a hit from a hard inquiry to your credit report.

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

Borrow Up to $35K with Flexible Terms Learn More

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

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) works much like a credit card. You can borrow as much as you need, up to a certain limit. During the draw period — a set amount of time the lender gives you to borrow up to your credit limit and draw on the amount again when you repay the principal — you’ll make interest-only payments on the amount you borrow. Once this period is over, you’ll then need to repay the entire loan, 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 best for those who have a lot of credit card debt to refinance and want to pay it off over a longer period of time — typically 10 years or more. How much you can borrow depends on your home equity.

To determine your home equity, take your home’s current value and subtract how much you still owe. For example, if your home is valued at $250,000 and you still owe $175,000, you have $75,000 worth of home equity. Lenders will then take this number to determine how much you can borrow, which is typically up to 85% or up to $63,750 using the above example.

However, the lowest rates tend to go to those with the highest credit scores. You also risk losing your home if you can’t keep up with payments.

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

Borrowing money from your 401(k) isn’t the best choice when it comes to refinancing or consolidating credit card debt.

First, you could significantly impact your retirement, and there may be tax implications. If you’re younger than 59.5 years old, you could pay taxes on the amount you borrow.

Secondly, you’re only permitted to borrow up to 50% of your account balance, up to $50,000. The IRS also requires you to pay back the loan in five years.

Unless you’ve exhausted all options, it’s probably best to avoid this one. The upside is that a 401(k) loan doesn’t require a credit check, and rates may be lower than credit cards, though that depends on your employer-sponsored plan.

Pros
  • No credit check to secure the loan
  • Rates may be lower than credit cards
Cons
  • May impact your retirement
  • Potential tax implications
  • Need to pay back the loan in five years

If you do go this route, talk to your 401(k) provider for further details.

Consider a debt management plan

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 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.

Pros
  • 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
Cons
  • There may be fees to use this service
  • Not all organizations are created equal

Use a specialized credit card debt service

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 process, Tally does a soft pull 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 you’re approved, your high-interest debt is moved over to the new line of credit from Tally. If you link credit cards to the app that have a lower interest rate than the Tally credit line, Tally pays just minimum payments on those cards. You also have the option to turn off the automatic minimum payment feature. In that case, Tally will remind you to pay that credit card bill, and you can make credit card payments in the app or directly with the card issuer.

You’ll receive one statement per month from Tally with a minimum payment due. The minimum payment includes interest on the Tally credit line, the amounts Tally paid to your different card issuers that month, plus 1% of your Tally credit line balance so that you are effectively chipping away at your overall balance.

Pay Off Credit Card Debt Faster Learn More

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.

Is refinancing credit card debt a good idea for you?

Credit card debt comes with hefty interest rates compared to other kinds of debt. In other words, you’re potentially going to pay a lot more for your loan if you keep your current credit card and stick with making only the minimum payments. If you have high credit card balances, it also means you likely have a high credit utilization ratio. This can negatively impact your credit score and make it even harder to qualify for good interest rates. 

But whether you have excellent or fair credit, consider refinancing or consolidating credit card debt to see if you can lower the amount of money you pay in interest. Doing so may help you save hundreds or thousands of dollars throughout the lifetime of your debt.

Before you refinance your credit card debt, consider whether it may improve your financial situation. For example, if you take out a home equity loan, you may risk losing your home if you’re not careful with repayments. Or you may end up paying a higher fee if you take out a personal loan with an origination fee.

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

Bankruptcy isn’t an easy option, but if all else fails, it may be your only way out of debt. There are several pros and cons to bankruptcy, but instead of viewing bankruptcy as a failure, consider it a way to restructure your finances.

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, they will also damage your credit score for several years.

Credit card debt refinancing FAQs

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 don’t make on-time payments 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 payments and use your credit cards responsibly. Additionally, opening a new credit card account increases your total available 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.

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.