Spending is on the rise — and so is consumer debt. Americans carry, on average, four active credit cards and have $6,523 in credit card debt, In Q2 2025 alone, U.S. credit card debt rose by $24 billion over the previous quarter, according to the Federal Reserve Bank of New York.
Credit card debt can be a challenge to pay off along with regular monthly household expenses. Some people may choose to refinance their high-interest credit card debt in order to secure a lower interest rate or a lower monthly payment. Refinancing credit card debt can be one way to make progress toward paying it off.
Table of Contents
Key Points
• Credit card refinancing may help you lower your monthly interest and payments and pay off your debt sooner.
• Credit card debt accrues when you spend more than you can pay off each month, and it can quickly add up due to compound interest and late fees.
• Refinancing with new terms or a new line of credit can lower your interest rates and help you manage multiple credit card balances.
• A personal loan is a refinancing option that will give you a fixed rate for the duration of the loan term, which can help save you money on interest.
• Your credit history influences the refinancing options available to you, such as balance transfer credit cards, home equity loans, and debt consolidation loans.
What Is Credit Card Debt?
If you’re putting more purchases on credit cards than you can pay off in a monthly billing cycle, you have credit card debt.
Interest accrues on the balance that carries over to the next billing cycle. If you don’t pay at least the minimum amount due, you’ll likely also be charged a late fee. Since credit cards use compound interest, you’ll be charged interest on accrued interest and fees. That can add up quickly and make it more difficult to get out of debt.
Carrying a balance on more than one credit card can make the debt even more challenging to manage. If your goal is to pay off credit card debt sooner, refinancing can be one way to achieve that.
Recommended: What Is the Difference Between Personal Loan vs Credit Card Debt?
What Are Some Benefits of Refinancing Credit Card Debt?
Credit card debt is revolving and typically has a variable APR.
Refinancing credit card debt with an installment loan that has a fixed interest rate, such as a personal loan, means you’ll have a fixed end date to your debt and the same APR for the entire term of the loan.
If you’re refinancing multiple credit card balances into one new loan or line of credit, you’ll have fewer bills to pay each month. That could potentially make monthly budgeting a simpler task.
Recommended: What Is a Good APR for a Credit Card?
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debt with a personal loan from SoFi.
How Might Debt Refinancing Affect Your Credit Score?
Something to keep in mind when your goal is to pay off debt is that it’s a long game.
That being said, in the short term, your credit score can decrease slightly when you apply for new credit and the lender looks at your credit report. During the formal application process, the lender will perform a hard inquiry into your credit report, which may result in a slight temporary drop in your credit score.
If you’re comparing multiple lenders, and they offer prequalification, they’ll do a soft inquiry into your credit report, which won’t affect your credit score.
Building your credit — or rebuilding it — through refinancing credit card debt is possible if you make on-time, regular payments on the new loan. Reducing your credit utilization can be another positive result of refinancing credit card debt. Both of these approaches can potentially increase your credit score.
It’s important not to overuse the credit cards you’ve refinanced into a new loan, however, or you might accumulate even more debt than you started with.
Will Canceling My Unused Credit Cards Affect My Credit Score?
After you’ve refinanced your existing credit card debt into a new loan, you might be tempted to cancel those credit cards. But that strategy could negatively affect your credit score.
Whether it’s a good idea to cancel a credit card really depends on the card. If you’ve had a credit card for a long time, closing it would shorten your credit history, which could result in a credit score drop. But if it’s a card you genuinely don’t have a reason to keep, such as a retail card for a store you no longer shop at or a card that has a high annual fee that can’t be justified with your current spending habits, closing the account might be the right step for you.
If you plan to keep a credit card open, it may be a good idea to use it for a small, recurring charge so the card issuer doesn’t close it for inactivity. Setting up autopay can be a convenient way to ensure the card stays open but is paid in full each month.
What Are Some Options for Refinancing Credit Card Debt?
Your overall creditworthiness is a determining factor when finding available refinancing options. Lenders will look at your credit report and credit score, paying attention to how you’ve handled credit in the past and how much total debt you have in relation to your income.
Balance Transfer Credit Card
If you qualify for a low- or no-interest credit card, you could use it to transfer a balance from another credit card. You’ll typically be charged a balance transfer fee equal to a percentage of the balance you’re transferring. The promotional rate on these types of cards is temporary, ranging from as short as six months to 21 months.
If you pay the transferred balance in full within the promotional period, you may not have to pay any interest, or you may only have to pay a minimal amount. However, if you still have an outstanding balance on the card when the promotional period is over, the APR will revert to the card’s standard rate for balance transfers.
Home Equity Loan
A potential source of refinancing funds might be your home if you have equity in it. Funds from a home equity loan can be used for just about anything, even things unrelated to your home. You can calculate how much equity you have in your home by subtracting the amount you owe on your mortgage from the current market value of your home.
In addition to the amount of equity you have in your home, lenders will often look at your income and credit history to determine how much you might qualify for. It’s common for lenders to limit a home equity loan to no more than 85% of the equity you have in your home. There are typically closing costs with a home equity loan, including appraisal, title search, origination, and other fees, which can cost between 2% and 5% of the loan amount.
A home equity loan is a second mortgage secured by your home. If you fail to repay the loan, the lender can foreclose your home.
Debt Consolidation Loan
Some lenders offer loans specifically for debt consolidation. These are actually personal loans, the funds from which can be used to pay off your existing credit card debt. Then, you’ll be responsible for repaying the debt consolidation loan. There may be fees charged on this type of loan, so be sure to look over the loan agreement carefully before signing it.
For a credit card consolidation loan to be as effective as possible at reducing your debt, it will ideally have a lower APR than you’re paying on your credit cards. In this way, you would be paying less in interest over the life of the loan. If a lower monthly payment is your goal, you may opt for a longer-term loan but may have to pay a higher interest rate.
Recommended: How to Get a Debt Consolidation Loan With Bad Credit
The Takeaway
If your credit card debt is piling up and you’re finding it challenging to pay down, you may be considering refinancing. Some credit card refinancing options include balance transfer credit cards with a promotional APR, home equity loan, or debt consolidation loan.
Credit cards have an average APR of 20%–25%, and your balance can sit for years with almost no principal reduction. Personal loan interest rates average 12%, with a guaranteed payoff date in 2 to 7 years. If you’re carrying a balance of $5,000 or more on a high-interest credit card, consider a SoFi Personal Loan instead. See your rate in minutes.
FAQ
What is credit card refinancing?
Credit card refinancing is a strategy in which you work toward paying off your existing credit card balance or debt with a loan or a new line of credit that has a lower rate. Refinancing options include a personal loan, balance transfer credit card, home equity loan, and debt consolidation loan.
Does credit card refinancing hurt your credit score?
Your credit score may go down at first, as the lender will perform a hard inquiry into your credit report, but the decrease is generally temporary. While refinancing, you can rebuild your credit score by paying off your new loan or credit card on time and by lowering your credit utilization.
What are the pros and cons of refinancing credit card debt?
Refinancing can help you pay off your credit card debt sooner, consolidate your credit card debt, reduce your credit utilization, or pay less in monthly interest. However, it may lower your credit score in the short term, and depending on your credit history, some refinancing options may not be available to you or may involve additional fees. For example, using a home equity loan to refinance typically includes closing costs, such as appraisal, title search, and origination fees.
What is the difference between credit card refinancing and debt consolidation?
Credit card refinancing and debt consolidation are both strategies that can help you manage your credit card debt. Credit card refinancing focuses on negotiating for better terms and interest and rebuilding a positive credit history. Debt consolidation is a type of personal loan whose funds can be used to pay off debt, including credit card debt.
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