Top Credit Card Refinance Personal Loan Providers
How Does Credit Card Refinancing Work?
Credit card refinancing involves transferring credit card debt to either a new card — with a much lower interest rate — or a personal loan. To do this, you’ll need to find a lender that offers these loans — or debt consolidation — for credit cards. You can then use the new loan or card to pay off your other credit cards.
Every lender has their own interest rates, repayment terms, and fees. Typically, borrowers with good credit or better will get the best rates and terms.
Done correctly, a card refinance or personal loan could help you save money on interest. It could also potentially make it easier to pay off your debts sooner. Plus, having one loan with a single monthly payment can simplify your payments.
There are three main ways to refinance your credit cards:
- Personal loan for credit card refinancing (debt consolidation): Sometimes called a “credit card refinance loan”, these loans let you combine several debts into one loan, ideally at a lower rate. You can then make monthly payments on the new loan until the balance is gone.
- 0% interest credit card: It’s possible to refinance credit card debt with a different credit card, ideally one with a low-interest or 0% introductory rate. To do this, you’ll need to transfer the balance from your current card to the new one. As long as you pay off the new card’s balance before the introductory period ends, you can save money on interest.
- Negotiate with the company: In some cases, your credit card issuer may be willing to lower the interest rate on your current card.
Here’s an example of how a credit card refinancing loan might look:
Say you have three credit cards, each with 25% APR. The total balance across all three cards is $10,000. If you pay $294 a month, it will take roughly 5 years to pay them off. Your total interest charges would be around $7,610.
Now, say you qualify for a $10,000 personal loan with a 5-year term and 15% APR. Your estimated monthly payment would be $237. Your total interest payments would be about $4,273. In total, you could be saving over $3,000 in interest.
How to Get a Personal Loan for Credit Card Refinance
The process of getting a credit card refinance loan depends on the lender, but here’s what you can typically expect:
- Calculate your credit card balances. Start by adding up your total credit card debt. This will help you determine the loan amount you need. Organize your credit cards based on interest rate so you know which ones to pay off first. That way, if you don’t qualify for a large enough loan, you can still tackle the most expensive cards.
- Check the requirements. Many lenders want to see proof of income, employment, and credit history. For the best rates and terms, you’ll typically need good credit. Some lenders have additional criteria, so review them carefully.
- Compare lenders. Shop around for lenders and compare their rates, terms, and other benefits or drawbacks. See what kind of reputation they have as well.
- Apply. Once you find the best lender for you, complete the application. You can usually do this online. You may need to provide some personal and contact information, as well as proof of income, assets, and liabilities. This can include things like bank statements, W-2s, and recent tax returns. Be prepared to provide additional information upon request.
- Wait for approval. Approval times vary by lender but can take several days. If approved, you can use the loan to consolidate your credit cards. This will leave you with only one loan, which you’ll be responsible for paying off.
Personal Loans for Credit Card Refinance: What to consider
Here are the main things to consider when taking out a credit card refinance loan:
- Loan amount: This is how much you borrow. Ideally, it will be high enough to cover your total credit card balances.
- Variable vs. fixed interest: Most personal loans come with a fixed interest rate, meaning your monthly payments stay the same. But some have a variable rate, which changes with the market.
- Repayment term: Terms can range from a few months to several years. With a longer term, you’ll usually have smaller monthly payments. but could end up spending more on interest.
- Lender fees: Some lenders charge additional fees, such as application, origination fees, or prepayment penalties. Some of these fees are added to the interest rate in what’s called the APR, or annual percentage rate. Calculate the interest rate and fees to ensure you’re saving money with credit card refinancing.
- Requirements: Eligibility varies by lender, but most require good credit history, steady income, and a maximum debt-to-income (DTI) ratio.
- Prequalification: This lets you check your possible rates and terms without affecting your credit score. It’s useful if you’re comparing several lenders.
- Cosigner: Some lenders let you add a cosigner to your application. A cosigner is someone who agrees to take responsibility for the loan if you default on payments. If they have good credit and income, they can increase your approval odds.
- Balance transfer: This is the process of moving the balance from one card to another. It’s usually done with low-interest balance transfer credit cards. Some companies will charge a balance transfer fee, which is usually a percentage of the transferred amount.
Pros and Cons of Credit Card Refinancing
Refinancing your credit cards — either with a personal loan or a balance transfer credit card — comes with several advantages. However, it’s important to consider the possible downsides of doing this as well.
Credit Card Refinancing Pros
- Makes it easier to pay off high-interest credit card debt
- Having only one loan or credit card can simplify your monthly payments, making it easier to pay them on time
- Potentially smaller monthly payments
- Could reduce your interest rate and save you money over time
Credit Card Refinancing Cons
- Does not reduce your principal balance
- May come with additional fees, such as loan origination fees, late payment fees, prepayment penalties, application fees, and balance transfer fees
- Transferring your credit card balances could tempt you to use the credit cards against, which could leave you with more debt
- Defaulting on payments could hurt your credit score
Should You Get a Personal Loan for Credit Card Refinance?
Credit card refinancing is typically best for people with good credit who qualify for the best rates and terms. It might be right for you if:
- Your credit score and income have improved, and you now qualify for better rates
- You’re struggling to juggle multiple monthly payments and want to have only one
- You have calculated the total cost of the new loan or card and can reasonably afford it
- The new loan or credit card will save you money overall
Average Credit Card Refinance Loan Rates
If you’re looking for a personal loan to consolidate your credit card debt, here are some of the best lenders with their typical rates:
Lender*
|
Typical APR
|
Loan Term
|
Loan Amount
|
Major Fees
|
Recommended Minimum Credit Score
|
Credible
|
4.60% to 35.99%
|
24 to 84 months
|
$600 to $100,000
|
May have origination or other fees
|
Depends on lender
|
LightStream
|
8.49% to 24.49%
|
24 to 144 months
|
$5,000 to $100,000
|
No prepayment penalties
|
740
|
SoFi
|
8.99% to 23.43%
|
36 to 84 months
|
$5,000 to $100,000
|
No prepayment penalties, origination fees, or late fees
|
740
|
Bankrate
|
6.70% to 35.99%
|
12 to 84 months
|
$500 to $100,000
|
Depends on lender
|
640
|
LendingTree
|
6.70% to 35.99%
|
12 to 144 months
|
$1,000 to $100,000
|
May have origination fees
|
680
|
*Rates subject to change