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Online and mobile banking are now woven into many people’s daily lives. With just a few clicks or taps, you can check your balances, pay bills, and make other financial transactions from virtually anywhere, at any time. Nearly half of the respondents to SoFi’s April 2024 Banking Survey of 500 U.S. adults said they use online banking daily.

Banks are not only convenient, they also implement numerous security measures to help safeguard your accounts. With cyber thieves and hackers finding increasingly sophisticated ways to try to access your information, however, it’s also important to be aware of steps you can take on your own to help keep your financial and personal details safe. Here’s what you need to know.

Tips on Securing Your Bank Account From Hackers

These days, cyber thieves are getting increasingly savvy, even setting up fake bank websites and banking apps designed to steal your personal information and, in turn, the contents of your checking or savings account. In SoFi’s Banking Survey, 42% of people said they were very or somewhat concerned about the security of their online bank accounts. More specifically, the survey found that:

•   42% were concerned

•   29% were neutral

•   29% weren’t very or at all concerned

No matter your level of worry, it’s important to know that there are a few simple things you can do to help secure your accounts from the different types of bank fraud. Here are six easy strategies that can help you stay ahead of scammers and hackers and protect your hard-earned cash.

Recommended: Are Online Savings Accounts Safe?

1. Choose Trustworthy Financial Apps

Whether you’re using your bank’s mobile app or some other financial app (like a budgeting app), be sure to only download verified ones from a trusted platform, such as the App Store for iPhone or iOS users or the Google Play Store for Android users. Fraudulent activity can often occur through fake apps or those downloaded from unofficial sources.

Before downloading a third-party money management app, it’s also a good idea to look up online reviews of the providers from reliable sources, research the app’s security policies, and look for any past data breaches.

2. Choose Strong and Unique Passwords

It’s wise to choose a unique password for every bank account and avoid repeating any ones you use for other online accounts, even nonfinancial ones. That way, if a fraudster is able to uncover your Facebook password, they won’t be able to access your checking or savings account.

To create a secure password, try to combine uppercase and lowercase letters, numbers, and special characters. You generally want to avoid using easily guessable information such as birthdates, kids’ names, or sequential numbers. To keep the login information for all of your accounts organized, consider using a physical or online password manager.

3. Use Multifactor Authentication

If possible, it’s a good idea to enable two- or multifactor authentication. This adds another layer of security by requiring one or more forms of verification in addition to a password, such as a PIN sent to your mobile device via email or SMS. This way, if hackers gain access to the login credentials for your savings account, for example, it may be difficult for them to log in without your second verification.

You may also want to take advantage of biometric authentication methods, such as fingerprint or facial recognition, if offered by your bank. Biometrics protect your account by using unique physical characteristics to verify your identity, making it harder for hackers to gain unauthorized access.

Recommended: Avoiding Mobile Deposit Scams, Fakes, and Hacks

4. Set Up Account Alerts

You can typically set up banking alerts via email, text, or your bank’s app to monitor unusual activity, such as large withdrawals, a profile/password update, a newly linked external account, or an unusual login attempt. This allows you to identify suspicious activity quickly and report any unusual or unauthorized transactions to your bank right away. You can then work with the bank to swiftly resolve the issue.

5. Watch Out for Phishing Attempts

Phishing scams are ever more prevalent and sophisticated. These scams trick you into providing your personal and banking information that can then be used for fraudulent activity.

For example, you could receive an email, supposedly from your bank, informing you that there’s a problem with your account and asking you to click on a link that requires you to log in and update your information. The website you are led to may look exactly like your bank’s website. If you input your details, hackers will have access to your login information. Here are a few ways to avoid online bank scams:

•   If you receive a message that says it’s from your bank and asks you to click a link, don’t. Log in to your banking website or app and check your messages there to see what’s going on. You can also call your bank to ask if the message is legitimate.

•   Hover over the email sender’s address. You may be surprised to see that it does not match the email address of the entity that it’s pretending to be. If that’s the case, don’t click on anything and mark the email as spam.

•   Never download attachments from unknown sources, as they may contain malware designed to steal your login credentials.

6. Be Wary When Using Public Wifi

The public wifi at your favorite coffee shop or local library can help you stay connected when you’re out and about, but you can’t count on it to be entirely secure. While it’s generally fine to use public wifi for browsing the web, it’s best to avoid using it for any activities that require login information, such as signing in to your bank account. The open connection could potentially give cyber thieves a chance to grab your username and password as they move between you and your bank’s website.

To make public wifi more secure, consider putting a virtual private network (VPN) app on your device. A VPN encrypts your data as it passes to and from your device and acts as a protective pathway so that your data is not visible as it passes through a network.

The Takeaway

Online banking is generally safe and convenient, but it’s also important to take precautions to minimize the risk of getting hacked or scammed. Luckily, there are steps you can take to reduce the risk of your bank account being compromised. These include using strong passwords and multifactor authentication, only downloading apps from reputable platforms, never clicking on links in communications that claim to come from your bank, and never logging into your bank account using public wifi.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Can hackers steal money from a bank account?

Hackers may be able to steal money from a bank account if they gain access to your account credentials. They might be able to do this by using deceptive emails and websites to trick you into revealing your bank details or exploiting vulnerabilities in a bank’s security systems to access sensitive data.

Fortunately, banks implement numerous security measures to safeguard your accounts, and you can help keep your accounts safe by using strong passwords, enabling multifactor identification, and being wise to phishing scams.

Who pays if your bank account is hacked?

If your bank account is hacked and unauthorized transactions occur, the bank will likely reimburse the stolen funds, provided you report the incident quickly.

As soon as you see something suspicious, call the number on the back of your bank card and go through the fraud department’s recovery process.

Am I protected if my bank account is hacked?

Yes, you are usually protected if your bank account is hacked, as long as you let the bank know about the fraudulent transaction in a timely manner.

Generally, if you report an unauthorized bank transaction within 48 hours, your liability will be limited to no more than $50. However, if you wait months to report an incident, you might have difficulty recovering any of your lost funds.

Can someone hack your bank account with a routing number and an account number?

Access to your bank routing number and account number could potentially enable a hacker to make fraudulent payments, create checks for your account, and possibly shop online with retailers that only require bank account information.

However, a routing number and account number is typically not sufficient on its own for hackers to gain direct access to your bank account. Most banks employ multiple layers of security measures, including authentication protocols and monitoring systems, to prevent unauthorized access to customer accounts.

Photo credit: iStock/insjoy

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

*Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

SOBNK-Q126-047

Loans have become an integral part of American financial life. We need a mortgage to buy our first home and an auto loan to purchase a car. More recently, people are turning to personal loans to pay surprise bills and avoid high-interest credit card debt. But just because you need a loan doesn’t mean a lender is going to give you the loan — and interest rate — you want.

If you’re struggling to qualify for a loan, a friend or family member may be able to help by becoming a co-borrower. By leveraging their income, credit score, and financial history, you may qualify for better loan terms. Let’s dive into the details.

Understanding Co-Borrowers

As you’re considering your options, a natural first question may be, what is a co-borrower? Essentially, a loan co-borrower takes on the loan with you, and their name appears on the loan alongside yours. They will be equally responsible for paying the loan back and have part ownership of whatever the loan buys. When you take out a mortgage with someone, the co-borrower will own half the home.

Spouses often co-borrow when buying property or taking out a personal loan for a home improvement or remodeling project. In other circumstances, two parties become co-borrowers so they can qualify for a larger loan or better loan terms than if they were to take out a loan solo.

Having a co-borrower can help two people who both want to achieve a financial goal — such as first-time homeownership or buying a new car — put in a stronger application than they might be able to do on their own. The lender will have double the financial history to consider, and two borrowers to rely on when it comes to repayment. Therefore, the loan is a less risky prospect for the lender, which may translate to more favorable terms.

Recommended: All About Variable Interest Rate Loans

Qualifying as a Co-Borrower

If you’re planning to have a co-borrower on your personal loan application, it helps to understand what criteria you both must meet in order to be accepted by the lender. Let’s take a closer look at common factors that lenders consider.

Credit Score

A credit score can have a significant impact on whether your loan application is approved and what terms you’re offered. There’s no magic number, but generally speaking, lenders prefer to see a score of 620 or higher. You and your co-borrower may want to check your credit scores at no cost before you apply.

Proof of Income and Employment

To help determine whether co-borrowers can afford loan payments, a lender will likely want to see proof of a stable income and employment. You may both be asked to provide recent pay stubs, tax returns, and bank statements. You might also be asked to show a letter from your employers verifying your employment status, how long you’ve both been employed, and your salaries.

Debt-to-Income Ratio

Debt-to-income ratio, or DTI ratio, is a comparison of your monthly debts to your gross monthly income (before taxes). Lenders use this information to help determine how risky it would be to loan money to a borrower. It can affect your ability to borrow money and the interest rate you’ll receive. Generally, lenders like to see a DTI that’s no higher than 36%, though there may be some wiggle room.

In addition to the above, lenders also usually consider:

•   Financial history. This includes recent bankruptcies, judgments, and liens.

•   Age. Many lenders have a minimum age for co-borrowers, typically 21 to 25 years of age.

•   Citizenship. Co-borrowers generally must be either citizens or permanent residents of the U.S.

Co-Borrower Process

If you’re applying for a loan with a co-borrower, the application process is fairly similar to the one you’d follow if you were applying alone.

A good first step is to reach out to your lender and start the prequalification process. If your co-borrower has a strong credit profile, that could improve your odds of qualifying for better rates and terms.

Next, you and your co-borrower will need to complete the loan application. You’ll also both undergo credit checks, and the lender will evaluate your finances. You may be asked to provide documentation such as pay stubs, bank statements, or tax forms.

Within a few days or so, you’ll find out if you’re approved and what your loan terms are. Once you agree to the terms, your loan funds will be disbursed, usually within a week. Your lender will also share details about how to make monthly payments.

Co-Borrower vs Cosigner

A cosigner plays a slightly different role than a co-borrower. A cosigner’s income and financial history are still factored into the loan decision, and their positive credit standing benefits the primary applicant’s loan application. But a cosigner does not share ownership of any property that the loan is used to purchase, and they will help make loan payments only if the primary borrower is unable to make them.

Cosigning helps assure lenders that someone will pay back the loan. Typically, a cosigner has a stronger financial history than the primary borrower. This can help someone get approved for a loan they might not qualify for on their own or secure better terms.

No matter which route you choose, there are potential credit implications to keep in mind. For example, when you apply for a loan, the lender will likely do a hard credit pull. This may cause credit scores to temporarily dip for you and your cosigner or co-borrower.

Both parties may also see a drop in their credit score if monthly payments are late or missed altogether. (And remember, cosigners will be on the hook for making loan payments if the main account holder can’t.) On the flip side, on-time payments can help boost or build credit scores.

When should you choose a cosigner vs. a co-borrower? The answer depends on your situation and goals. If you intend on sharing ownership of whatever you buy with the loan, then a co-borrower may be a good choice. If you simply need someone with a strong credit history to bolster your loan application, then consider using a cosigner.

Recommended: What Is Revolving Credit?

The Takeaway

Taking out a loan is a big decision, and doing so with a co-borrower carries additional risks. A co-borrower is a partner in the loan and any property the loan is used to purchase. If one borrower cannot make their payments, the co-borrower will be on the hook for the full amount. But if both parties can come to an agreement about how they’ll handle potential financial hardships, co-borrowing can have major benefits. By pooling their income and debt, borrowers may lower their debt-to-income ratio and qualify for a mortgage or personal loan with a lower interest rate and better terms.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Are co-borrowers equally responsible for a debt?

Co-borrowers are equally responsible for the debt. If one borrower cannot pay, the other must cover the entire amount.

Does a co-borrower increase your approval odds?

A co-borrower with a higher income or better credit score can help you qualify for a loan and potentially secure better interest rates.

Does a co-borrower have ownership rights?

A co-borrower typically has ownership rights to the asset being purchased. The co-borrower is a joint owner on the title and has a legal stake in the asset.

Photo credit: Stocksy

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q126-045

If you’re searching for a credit card, but you need to build your credit, you may come across secured credit cards. What exactly is a secured credit card and how is it different from an unsecured card?

Read on to learn how both types of credit cards work to help decide whether a secured or unsecured credit card may be right for you.

What Is a Secured Credit Card?

A secured credit card offers a revolving line of credit that you can borrow from and then repay. What makes it different from an unsecured credit card is that with a secured credit card, you need to put down a deposit to “secure” the card before opening an account.

The bank holds onto that money as a form of collateral if you default on payments. The money is refundable if you close your account or upgrade to an unsecured (traditional) credit card. Your secured credit card’s credit limit is usually the same amount as your deposit. The deposit is typically at least $200 to $500, depending on the specific card and how much you can afford to put down.

A secured credit card is designed for building credit. So if you’re working on building your credit or don’t have much in the way of a credit history because you’re young or new to the country, it could be an option. The age requirement to get a credit card that’s secured is the same as for an unsecured credit card — typically age 18.

How Secured Credit Cards Work

As noted, you’ll need to put down a deposit to open a secured credit card. Your available line of credit is usually the same amount as your deposit. As part of the way credit cards work, you’ll need to pay the balance on the card, and your credit limit will get replenished as you make payments.

As with an unsecured credit card, there’s a minimum monthly payment you’re responsible for. If you carry a balance from month to month, you’ll incur interest charges. Your credit card activity, including your payment history, is generally reported to the three major credit bureaus, Experian®, Equifax®, and TransUnion®.

Your deposit on a secured credit card isn’t used to make payments should you fall behind or miss credit card payments altogether. If you’re unable to make payments and your account goes to default, you’ll lose your deposit. Plus, it can hurt your credit. If the balance you owe is larger than the deposit, you might be on the hook for the difference owed.

Secured credit cards may offer a “graduation” option. In other words, if you make on-time payments and show a track record of responsible financial behavior, the credit card issuer might offer you an unsecured credit card.

Recommended: Tips for Using a Credit Card Responsibly

Pros and Cons of a Secured Credit Card

Let’s look at some of the advantages and downsides of a secured credit card:

What Is an Unsecured Credit Card?

Also known as a traditional credit card, an unsecured credit card doesn’t require a deposit or collateral. Instead, you’re offered a credit limit based on your creditworthiness and other factors, such as your income and existing debt. You’ll generally need a higher credit score and more robust credit history to qualify.

Just as with a secured credit card, the credit remaining on an unsecured credit card dwindles as you rack up a balance. Once you make a payment, your limit replenishes. For example, say your credit limit is $5,000. If your balance is $500, your credit limit goes down to $4,500. Once you pay off your balance, your credit limit goes back up to $5,000.

The annual percentage rate (APR) and terms associated with an unsecured credit card are usually (but not always) better than they are for a secured credit card. Typically, the better your credit score, the better your rates and terms are for an unsecured credit card. The average unsecured credit card APR as of February 2026 is 25.27%; meanwhile, many of the top secured credit cards have APRs that are around 28.49% or higher.

How Unsecured Credit Cards Work

Because an unsecured credit card is a form of revolving credit, you have access to that credit line as long as you remain in good standing and your account stays open. Unsecured credit cards also require you to make minimum monthly payments to avoid incurring late payment fees and harming your credit score. You’ll owe interest on any balance that carries over from month to month.

Sometimes, unsecured credit cards might offer perks, such as cash-back rewards and travel insurance.

Pros and Cons of an Unsecured Credit Card

Here are some of the pros and cons of traditional, or unsecured, credit cards:

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Similarities Between a Secured Credit Card and an Unsecured Credit Card

When it comes to a secured credit card vs. an unsecured credit, there are a number of similarities:

•   Both are revolving lines of credit, so you’ll have access to those lines of credit as long as you keep the card open and your account in good standing.

•   Your payments are reported to credit bureaus. If you make on-time payments, your credit score may be positively impacted. Conversely, your score can drop if you don’t use your credit card responsibly.

•   The process of how to apply for a credit card is usually similar for both a secured and unsecured credit card. You can usually fill out an application online, in person, over the phone, via an app, or through the mail.

•   Both secured and unsecured credit cards come with interest rates and fees. Depending on the card, there might be an annual fee.

•   Both types of credit cards usually offer a grace period, which is the period between when your billing cycle ends and your payment due date. During this time, you may not be charged interest as long as you pay off your balance in full by the payment due date.

•   While it’s less common among unsecured credit cards, both types of credit cards might feature perks, such as cash-back rewards, travel miles, car rental insurance, and price protection.

Differences Between a Secured Credit Card and an Unsecured Credit Card

There are a handful of features that set these two types of credit cards apart:

•   For starters, secured credit cards require a security deposit, whereas unsecured credit cards do not.

•   The credit limit for a secured credit card usually matches the deposit amount. With unsecured credit cards, the credit limit usually depends on a number of factors, such as your creditworthiness.

•   Secured credit cards generally carry higher interest rates and fees, whereas unsecured credit cards typically have lower interest rates and fees.

Secured vs. Unsecured Credit Card: Which Is Right for You?

Now that you know the similarities and differences between a secured and an unsecured credit card, you can start to assess which one might be right for you. Here’s an overview to help you better compare what sets secured vs. unsecured credit cards apart:

Staying on Top of Your Credit After Choosing a Card

No matter if you choose a secured credit card or an unsecured credit card, it’s important to stay on top of your payments. Ideally, you would pay the balance in full each billing cycle. Otherwise, you’ll owe interest.

Making at least the minimum payment each month is important to keep credit intact and avoid late fees. If you’re struggling to make payments, reach out to the lender and see what they can do. They might be able to change the payment due date so it’s more in line with what’s feasible for you, for example.

The Takeaway

Whether an individual applies for a secured credit card and an unsecured one may depend largely on the strength of their credit. A secured card may be helpful if they’re working to establish or build credit, while an unsecured card could be the option for someone whose credit is more established and who wants to earn rewards.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Is an unsecured or secured credit card better?

Whether a secured vs. unsecured credit card is better depends on your situation. A secured credit card might be right for someone who is having trouble getting approved for a secured card and can afford to make the deposit. An unsecured credit card may be an option for a person who has at least a fair credit score, is looking for a higher credit limit, and would like more card options.

Should your first credit card be secured or unsecured?

If you have a thin credit history, are looking to build credit, and can afford the security deposit, a secured credit card is generally easier to qualify for. Note, however, that these cards generally have a higher interest rate and a lower credit limit. While an unsecured credit card doesn’t require a deposit, it might be harder to get approved for one if your credit is poor or you don’t have much of a credit history yet.

Does a secured credit card hurt your credit?

As long as you pay your bills on time every month and use the card responsibly, a secured credit card may positively impact your credit. Secured credit cards are designed for building credit, which means a secured card could be an option for someone who is working on their credit or doesn’t have much of a credit history.

Photo credit: iStock/cesar fernandez dominguez

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOCC-Q126-045

If you’re repaying a variety of debts to different lenders, keeping track of them all and making payments on time each month can be time-consuming. And it isn’t just tough to keep track of — it’s also difficult to know which debts to prioritize to fast-track your debt repayment. After all, each of your cards or loans likely has a different interest rate, minimum payment, payment due date, and terms.

Consolidating, or combining, your debts into a single new loan or credit line could give your brain and your budget some breathing room. We’ll take a look at what it means to consolidate debt and how it works.

What Is Debt Consolidation?

Debt consolidation involves taking out one loan or line of credit — ideally with a lower interest rate — and using it to pay down other debts, whether that means car loans, credit cards, or another type of debt. After combining those existing loans into one, you have just one monthly payment and one interest rate.

💡 Quick Tip: Credit card interest rates average 20%-25%, compared to 12% for a personal loan. And with loan repayment terms of two to seven years, a loan could let you pay down your debt faster. With a SoFi personal loan to consolidate credit card debt, who needs credit card rate caps?

Common Ways to Consolidate Debt

Your options to consolidate debt depend on your overall financial situation and which types of debts you want to consolidate. Here are some common approaches.

Balance Transfer

If you’re able to qualify for a credit card that has a lower annual percentage rate (APR) than your current cards, a balance transfer credit card can be a smart financial strategy to consolidate debt as long as you use it responsibly.

Some credit cards have zero- or low-interest promotional rates specifically for balance transfers. Promotional rates typically apply for a limited time only, but if you pay off the transferred balance in full before that period ends, you’ll reap the benefit of paying less — or even zero — interest.

However, there are caveats to keep in mind. Credit card issuers generally charge a balance transfer fee, often 2% to 5% of the amount transferred. And if you use the credit card for new purchases, in many cases the card’s purchase APR, not the promotional rate, will apply to those purchases.

At the end of the promotional period, the card’s APR will revert to its regular rate. If a balance remains at that time, it’ll be subject to the new, regular rate. Making late payments or missing payments entirely will typically trigger a penalty rate, which will apply to both the balance transfer amount and regular purchases made with the credit card.

Home Equity Loan

If you own a home and have equity in it, you might consider a home equity loan for consolidating debt. Home equity is the home’s current market value minus the amount remaining on your mortgage. For example, if your home is worth $300,000 and you owe $125,000 on the mortgage, you have $175,000 worth of equity in your home.

Another key term lenders use in home equity loan determinations is loan-to-value (LTV) ratio. Typically expressed as a percentage, the LTV represents the other side of the scale to equity: Instead of how much you own, it’s how much you owe. That percentage is calculated by dividing the home’s appraised value by your remaining mortgage balance.

Lenders typically like to see applicants whose LTV is no higher than 80%. In the above example, the LTV would be 42%.

If you qualify for a home equity loan, you’ll typically be able to tap into up to 85% of your equity. After the home equity loan closes, you’ll receive the loan proceeds in one lump sum, which you can use to pay down your other debts.

A home equity loan is considered a second mortgage, a secured loan using your home as collateral. Since there’s a risk of losing your home if you default on the loan, this option should be considered carefully.

Personal Loan

If you don’t have home equity to tap into, or you prefer not to put your home up as collateral, a personal loan is another option to consider.

There are many types of personal loans, but most are unsecured loans, which means no collateral is required to secure the loan. They can have fixed or variable interest rates, but the vast majority have fixed rates.

Generally, personal loans offer lower interest rates than credit cards, so consolidating credit card debt into a fixed-rate personal loan may result in savings over the life of the loan. Also, since personal loans are installment loans, there’s a payment end date, unlike the revolving nature of credit cards.

There are many personal loan lenders, and the application process tends to be fairly simple. A loan comparison site can help you see what types of interest rates and loan terms you may be able to qualify for.

When you apply for a personal loan, the lender will do a hard inquiry into your credit report, which may temporarily lower your credit score by a few points. If you’re approved, the lender will send you the loan proceeds in one lump sum, which you can use to pay down your other debts. You’ll then be responsible for paying the monthly personal loan payment.

One drawback to using a personal loan for debt consolidation is that some lenders charge an origination fee, which reduces the amount you receive without affecting the amount you’ll have to repay. There may also be other fees, such as late fees or prepayment penalties. It’s important to make sure you’re aware of any fees and penalties before signing the loan agreement.

💡 Quick Tip: Swap high-interest debt for a lower-interest loan and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

Is Debt Consolidation Right for You?

Your financial situation is unique to you, but there are several things you’ll want to keep in mind when trying to decide if debt consolidation is right for you.

Debt Consolidation Might Be a Good Idea if…

•   You want to have only one monthly debt payment. It can be a challenge to manage multiple lenders, interest rates, and due dates.

•   You want to have a payment end date. A home equity loan or a personal loan could be useful for this reason because both are forms of installment debt.

•   You can qualify for a low- or zero-interest credit card. This could allow you to consolidate multiple debts on one new credit card and save on interest by paying down the balance before the promotional rate ends.

Debt Consolidation Might Not Be for You if…

•   You think you’ll be tempted to continue using the credit cards you paid down in the debt consolidation process. This can leave you further in debt.

•   You’ll incur fees (e.g., balance transfer fees or origination fees). If those fees are high, it might not make sense financially to consolidate the debts.

•   Consolidating your debts may actually cost you more in the long run. If your goal is to have smaller monthly payments, that generally means you’ll be making payments for a longer period and incurring more interest over the life of the loan.

Recommended: Getting Out of Debt With No Money Saved

Credit Card Debt Relief: How to Get It

Some people seek assistance with getting relief from debt burdens. Reputable credit counselors do exist, but there are also many programs that scam people who may already be overwhelmed and vulnerable.

Disreputable debt settlement companies may charge substantial fees upfront and often make bogus claims, such as guaranteeing that they’ll be able to make your debt go away or saying that there’s a government program to bail out those in credit card debt.

Even if a debt settlement company can eventually settle your debt, there may be negative consequences for your credit. A debt settlement program may require that you stop making payments to your creditors. But your debts may continue to accrue interest and fees, putting you further in debt. The lack of payments may also take a negative toll on your payment history, which is an important factor in the calculation of your credit score.

Recommended: Debt Settlement vs Credit Counseling: What’s the Difference?

Debt Relief: Is It a Good Idea?

What’s a good idea for some people may be a bad idea for others. Whether debt relief is a good idea for you and your financial situation will depend on factors that are unique to you. Working with a reputable credit counselor may be a good way to get assistance that will help you pay down your debt and create a solid financial plan for the future.

The Takeaway

Debt consolidation allows borrowers to combine a variety of debts, such as credit card debt, into a new loan. Ideally, this new loan will have a lower interest rate or more favorable terms to help streamline the repayment process.

Whether or not you agree that credit card interest rates should be capped, one thing is undeniable: Credit cards are keeping people in debt because the math is stacked against you. If you’re carrying a balance of $5,000 or more on a high-interest credit card, consider a SoFi Personal Loan instead. SoFi offers lower fixed rates and same-day funding for qualified applicants. See your rate in minutes.

FAQ

What is debt consolidation?

Debt consolidation is the process of combining multiple debts into a single loan or line of credit. This may help you simplify your financial situation. Ideally, the new loan or line of credit should have a lower interest rate than those you’re paying on your existing debts, so you also save money on interest.

What options exist for consolidating debt?

Common options for debt consolidation include balance transfers to a credit card with a low or zero interest rate (sometimes offered specifically for balance transfers), home equity loans, and personal loans. The most practical choice will depend on your financial situation, including what kinds of debts you have and how much equity you hold in your home.

What are the pros and cons of debt consolidation?

Consolidating multiple debts into one line of credit or loan may help you keep your finances organized and could save you money through a lower interest rate, as well as offering an end date for your debt payoff. However, fees may cancel out the potential savings, and spreading payments over a longer period could lead to your paying more interest overall.

Who qualifies for debt consolidation?

Whether you qualify for debt consolidation depends on how you plan to consolidate your debts. To secure a home equity loan, for example, you’ll probably need to have at least 20% equity in your home. To apply for a personal loan, you won’t need that collateral, but the lender will check your credit score.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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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.

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?

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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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