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There are many reasons people end up in debt. Medical bills, emergency home or car repairs, a job layoff. And some of us just didn’t know that it’s best to pay off credit cards in full every month. Either way, no judgment here. If you have high-interest credit card debt and are ready to put together a plan to pay it back, you might be considering one of two popular methods: Credit card refinancing vs. debt consolidation.

Both involve paying off your debt with another credit card or loan, ideally at a lower interest rate. Still, the two methods are not the same, and both options require careful consideration. Below, we’ll discuss the pros and cons of each debt payback method, so you can make an informed decision.

What Is Credit Card Refinancing?

Credit card refinancing is the process of moving your credit card balance(s) from one card or lender to another with a lower interest rate. The main purpose of refinancing is to reduce the amount of interest you’re paying with a lower rate while you pay off the balance.

Borrowers may accomplish this by paying off their existing credit cards with a brand-new balance transfer card. This type of credit card offers a low or 0% interest rate for a promotional period of up to 21 months.

For example, say a borrower has $10,000 on a credit card that charges 20% interest. By switching to a 0% interest card (and making payments on time), they can save around $2,000 in the first year alone, provided there are no fees or penalties. Alternatively, if the borrower switches to a card that charges 10% interest in the first year, they can save around $1,000.

Recommended: The Risks of Payday Loans

What Are the Pros and Cons of Credit Card Refinancing?

We’ve discussed the goal of credit card refinancing — to lower your interest rate — and how to accomplish it. Now let’s explore some of the pros and cons of refinancing.

Pros of Refinancing

The primary benefit is the chance to pay off credit card debt while paying little to no interest for the first 12 or more months. For a relatively small credit card balance — one that can comfortably be paid off within a year — this can be an effective strategy.

Cons of Refinancing

Balance transfer cards come with major catches: The low or 0% interest period is short-term (6-21 months), and there may be a balance transfer fee of 3%-5%. For a borrower with $10,000 in credit card debt, a 5% balance transfer fee comes out to $500.

For some borrowers, the amount they’re saving in interest might not be worth the transfer fee. This is especially true if the borrower ends up unable to pay off their balance within the introductory period. After the promotion ends, the interest rate can skyrocket to as high as 25%.

This brings up yet another consideration: Balance transfer cards don’t put any structure into place for the borrower to follow in order to fully pay off the credit card debt. A borrower can just as easily continue making only the minimum payments and even add to the balance of the debt. This is the risk we run with what is called revolving credit.

Finally, 0% interest balance transfer cards often require a high credit score to qualify. However, borrowers hoping to qualify in the future can build their credit by making all payments on time and reviewing their credit report for errors.

Recommended: Loans With No Credit Check

What Is Credit Card Debt Consolidation?

Credit card consolidation refers to the process of paying off multiple credit cards with a single loan, referred to as a debt consolidation loan or personal loan. Unlike refinancing, the main purpose of consolidation is to simplify bills by combining multiple credit card payments into one fixed loan payment.

A borrower may also pay less in interest, but the difference may not be as great as with refinancing. An applicant’s credit score and other financial data points will determine their personal loan interest rate.

What Are the Pros and Cons of Credit Card Debt Consolidation?

As we mentioned, credit card debt consolidation serves to pay off multiple credit cards with a single short-term loan. But as with credit card refinancing, there are advantages and disadvantages.

Pros of Debt Consolidation

Consolidation allows borrowers to pay off multiple debts and replace them with one monthly payment and a set repayment term of their choosing. Borrowers benefit from the structured nature of a personal loan: They make equal payments toward the debt at a fixed rate until it is completely eliminated.

With most personal loans, the borrower is able to opt for a fixed interest rate, which ensures payments won’t change over time. (Variable interest rate loans are available, but their lower initial rate can go up as market rates rise.) You might have a $10,000 loan, for instance, with a repayment term of five years at 8% interest — a rate that will not change for the duration of the loan.

Secured personal loans that require collateral sometimes offer lower interest rates. However, the savings is usually not worth the risk of losing your car or home. For that reason, unsecured personal loans are preferable.

Cons of Debt Consolidation

The terms of a personal loan will almost always be based on the borrower’s credit history and their holistic financial picture. That means that not every borrower will qualify for a low interest rate, or get approved for a personal loan at all.

Another hazard is the potential for a borrower to run up their credit card debt again, once their cards are paid off. Canceling all but one card can help prevent that. However, borrowers should research how canceling their credit cards might affect their credit scores.

Credit Card Refinancing vs Debt Consolidation

To recap, the difference between debt consolidation and credit card refinance is first a matter of goals. With credit card refinancing — as with other forms of debt refinancing — the borrower’s aim is to save money by lowering their interest rate. Debt consolidation may or may not save the borrower money on interest, but will certainly simplify bills by replacing multiple credit card obligations with a single monthly payment and a structured payback schedule.

The other difference is that credit card refinancing typically utilizes a balance transfer credit card that has a 0% or low-interest rate for a short time. This limits the amount a borrower can transfer to what they can comfortably pay off in a year or so. Debt consolidation utilizes a personal loan, which allows for higher balances to be paid off over a longer payback period.

Credit Card Refinancing vs Balance Transfer Cards

These two terms are not mutually exclusive. Instead, a balance transfer credit card is one way to refinance credit card debt.

The Takeaway

Credit card refinancing is when a borrower pays off their credit card(s) by moving the balance to another card with a lower interest rate. A popular way to do this is with 0% interest balance transfer credit cards. However, borrowers typically need a high credit score to qualify for these cards. Debt consolidation, on the other hand, is when a borrower simplifies multiple debts by paying them off with a personal loan. Personal loans with a fixed low interest rate and a structured payback schedule are a smart option for consolidating debts.

If you have a relatively small balance that can be paid off in a year or so, refinancing with a balance transfer credit card may be right for you. If you have a larger balance or need more time to fully pay it off, personal loans are available for terms of up to 7 years.

Tired of juggling logins and payment schedules with a bunch of other lenders? SoFi Personal Loans can help you save money, take control of your finances, and simplify your life by consolidating everything at a single, low rate. It only takes minutes to apply.

Don’t let high interest interfere with your interests.

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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.

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 .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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A personal loan can be a lifesaver. But what if you realize you should have taken out more than you did? In most cases, you can’t increase your loan after the fact. However, you may be able to take out a second personal loan.

If you want or need to borrow more, we’ll review your options, their pros and cons, and some alternatives to borrowing.

What if You Want to Borrow More in Personal Loans

If you’ve already taken out a loan but need additional funds, you might be wondering if you can add to your existing personal loan. In most cases, the answer is no. You can’t increase your loan amount, but you may be able to apply for a second loan. Technically, there’s no limit to how many personal loans you can have.

Lenders may approve a second or third loan if the borrower has paid off part of the first loan and has a history of on-time repayment. In some cases, you need to have made at least three consecutive scheduled payments on your existing loan.

To help your chances of getting approved for a new loan, it helps to understand the general process.

Considerations Before Applying for a New Personal Loan

If you’re looking into adding to an existing personal loan, you’re probably already familiar with the basics. While there are different types of personal loans, they all typically have lower interest rates than credit cards. According to the Federal Reserve, the average APR for personal loans was 8.73% as of September 2022, compared to the typical credit card interest rate of 16.65%.

Common uses for personal loans include covering medical bills, paying for home repairs, and consolidating debt. Plus, personal loans are widely available from a variety of sources, from banks and online lenders to credit unions and nonprofits.

But debt is still debt. Increasing debt can have negative consequences: lowering your credit score, raising your risk of defaulting, and adding to general financial stress. Plus, loans come with interest that accrues over time, so you are paying more for the borrowed money over the life of your loan. The last thing you want to do is dig yourself into a deeper financial hole.

Before you take out another loan, take a step back and consider whether you truly need to borrow the money. Ask yourself:

•   Can you save for your goal by trimming expenses or taking on a side hustle?

•   Can you work on paying off your existing debt first?

Applying for a New Personal Loan

Of course, we’d all like to have enough savings in the bank to cover a major expense. But reality is complicated and emergencies are, by definition, hard to plan for. (Hello, surprise medical bills!)

If you’ve decided that borrowing makes sense for you, it’s possible to apply for an additional personal loan. A personal loan calculator can help you find out what interest rate and term options you may qualify for. Generally, shopping around for a loan requires only a soft credit inquiry, which doesn’t affect your credit score.

Applying with a Co-Applicant

In some cases, you may realize that your existing debt is making it hard to qualify for a new loan. But you still have another option: You may be able to re-apply with a co-applicant. If the co-applicant has a strong credit history and income, you may be able to obtain a loan or qualify for a lower interest rate together.

Once you receive the loan, both you and the co-applicant (who typically becomes the co-borrower) will be responsible for paying it off. That means if you fail to live up to your agreement in making payments, the other can be held responsible for the full amount of the loan. A co-borrower typically can’t be removed from the loan unless they die or you pay the loan off entirely.

If you still don’t qualify, the biggest help for qualifying in the future might be time. Building up a history of making debt payments on schedule, paying down other debt, and increasing your income via a new job or side gig can all turn things around.

Recommended: Getting a Personal Loan with a Co-Applicant

The Takeaway

In most cases, borrowers can’t add to an existing personal loan. However, you may be able to apply for a second loan. Eligibility requirements vary by lender, but in some cases you need to have made several consecutive on-time payments before applying for a new loan. Whenever possible, borrowers should look into cutting back on expenses or trying to increase income before taking on more debt.

SoFi Relay can help you keep track of your budget while you’re paying off debt. If you’re looking to apply for a personal loan, consider checking out the options available at SoFi. SoFi Personal Loans have absolutely no fees — no origination fees required, no prepayment fees, and no late fees.

Whether it’s your first time or you’ve borrowed before, it’s easy to apply for a personal loan with SoFi.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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Global inflation and supply chain issues have derailed a lot of people’s post-COVID plans, including renovating or remodeling their homes. The cost of remodeling and renovating has risen partly because there’s a shortage of supplies, so retailers have raised prices on the supplies and materials they do have. Plus, the Federal Reserve Bank has raised interest rates in an effort to slow inflation, meaning home improvement loans cost more. This doesn’t necessarily mean homeowners must put off renovations, but it does mean that sticking to your home reno budget may require more creativity and planning.

How to Keep Inflation From Ruining Your Home Renovation Budget

Here are some strategies for keeping inflation from blowing your home reno budget:

1. Understand Renovation vs Remodel

People use the terms renovation and remodel interchangeably, but they are not the same thing. A renovation is fixing up what’s already there; a remodel is changing what’s there. That may mean expanding a room, or converting a pantry to a breakfast nook. Remodeling is usually more expensive because it is more involved and can include the need for permits, whereas renovations are often smaller projects that you can sometimes DIY. Before getting started with either, it can be smart to budget for the level of transformation you can reasonably afford in this economic climate.

2. Invest Wisely

One thing experts agree on is that the best home renovation or remodel investments are projects that can raise the value of a home at resale. Some of these projects include a kitchen or bathroom makeover, expanding outdoor space, and even just replacing the garage door. SoFi’s home improvement ROI calculator can help you identify some of these home investment opportunities.

3. Finance Carefully

Since you’re investing in your home, especially with the idea of improving its value, it’s smart to look for the right partner to help you strategize how to finance your project. It’s possible your project may be eligible for a home equity loan where you borrow against the value of your home for funds. Another financing option is a personal loan. Unlike the home equity loan, a personal loan for home improvement projects requires no collateral.

💡 Learn more about how home improvement loans work.

4. Have a Plan

Home renovation projects notoriously run over budget. Global supply chain issues are making that even worse. Many projects must happen according to a specific sequence, like receiving a delivery of plumbing supplies and scheduling workers before you gut the bathroom. If something goes wrong with the sequencing, it might mean you lose your workers to another job that’s ready to go, or you have to pay extra to expedite shipping. These hold ups can be expensive. That’s why it’s important to plan meticulously before you begin.

5. Be Flexible

Can’t get the Italian granite you were eyeing for the kitchen counters? What about slate, which can be a fourth of the price and can look just as stunning. Or Sintered Stone? Or steel? Deciding from the beginning to be flexible on the things you can, and uncompromising only on the materials or designs that really matter to you, can save you thousands.

6. Consider High Quality Items

Because there is generally lower demand for slightly higher quality and pricier items, those appliances and materials haven’t risen as much in price . So you might have an opportunity to get something you might have considered out of your price range for about the same as the more standard one.

7. Oversee the Project

The typical contractor fee for most general contractors to oversee renovation projects is 20% of the project , so if you’re planning a $50,000 remodel and you do the contracting yourself, you could save $10,000 right off the bat. But it will be your job to source and schedule the experts you need — plumbers, electricians, etc. — and oversee the work. Just remember: It’s not uncommon to pay to have a job done twice during renovations, so it’s wise to stay on top of workers if you choose this option.

8. Do Something Yourself

Using skills you already have, or picking up a few through online videos and in-person workshops, can save you some time and money. If you decide you can do the job yourself, and it isn’t one that requires permitting and licensing, you may be happy with your results. Doing it yourself does have its risks such as not ending up with the quality you could have by using a professional. On the other hand, if you have some skills, you might do a better job than a mediocre contractor who isn’t as invested in your home as you are.

9. Vet Your Craftsman

Hiring someone who does a poor job or damages your home is a common risk of home renovation projects. Shopping for carpenters, painters, plumbers, and others solely on the basis of price can very easily lead to problems, which can require more time and investment on your part to correct. Choosing a contractor that’s skilled and reliable requires taking the time to look at portfolios, ask questions, and seek recommendations and reviews.

10. Collect a few Bids

It can take more time, but getting bids from several different companies is a smart way to help keep your renovation costs low. Not only does this type of “shopping” give you options for how much you can pay for specific tasks, but it can also give you an idea of how different contractors would approach your project.

11. Shop Wisely

It can be easy to order items online or pick up everything from your local home remodeling store, but high shipping costs and limited in-store options can actually increase your expenditures. If you’re looking to minimize costs, settling for what’s most convenient isn’t likely to help you. Instead, taking the time to shop around thoroughly and think creatively about your renovation plans can help save you a bundle.

12. Price Match

If you find an appliance online that you really love, you may want to try bringing a copy of that ad to your local retailer, and asking them to match the deal. This way you not only save yourself shipping costs, but you also get the best price for the item you prefer.

13. Try Repurposing

Before you spend money replacing what you have, consider transforming your items instead. Perhaps you could refinish or paint your kitchen cabinets instead of replacing them. Changing the hardware and interior panels are also simpler options that can reflect your style. Sometimes small changes can result in big transformations.

14. Consider Salvaged Materials

You can sometimes save big using salvaged materials. Secondhand shops like Habitat ReStores can sell old kitchen cabinets, flooring, light fixtures, plumbing fixtures, and furnishings for a fraction of the original sale price. You can even find unused paint, hardware, and art. For additional options, online sites like Craigslist and Facebook Marketplace can provide useful, previously used items as well.

15. Be Creative Side

Pinterest can be a great source of budget friendly renovation ideas. You can spend a few hundred dollars on a mason jar light fixture; or you could make your own. How about creating a room divider with used pallets? Necessity is often the mother of invention, and you may discover a creative side you didn’t know you had by looking for creative design solutions.

The Takeaway

Inflation and supply chain problems can make home renovations and remodeling on a budget much more challenging, but not impossible. If you choose the best projects for added value; plan and shop for materials and craftspeople with care; and are willing to be creative and flexible, you can wind up investing less money, time and worry.

If your home renovation budget is a tad bit short of your dream, a home improvement loan from SoFi could give you the extra boost you need. With no collateral, no fees and the opportunity for same-day funding, SoFi can help get your project up and running in no time.

Explore how a home improvement loan can kick off your home renovation.

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Photo credit: iStock/LightFieldStudios

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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.

SOPL0622011

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Maybe you’ve just bought a house, or maybe you’ve had your house for decades and love everything about it — except for the extremely outdated kitchen, built before the days of marble top counters, stainless steel appliances, and kitchen islands. Renovating your kitchen can get expensive fast, but with inflation, materials cost even more than usual, so it can be tougher to control expenses. Luckily, there are a few strategies you can use to get the updates you crave, without emptying your pockets.

How to Keep Inflation From Ruining Your Kitchen Renovation

1. Setting A Budget

Like most people, you probably already have a budget in mind. That’s a good start, but even with a spending limit in place, it’s smart to use a tool like this home renovation cost calculator to get an estimate of what your kitchen reno will ultimately cost, and make sure your budget will truly cover it. These calculators allow you to choose from basic to extremely bespoke changes, and they consider the cost of labor and raw material, generally with a 20% margin for the contractors. (And contractors can cost much more than you may expect!)

2. Being Flexible

Be flexible about your upgrades. It’s not uncommon to have to cut back on some of your plans due to price hikes, sold out materials or surprise developments during construction. Expect to make compromises. If your dream project begins to get pricey, consider focusing on just one or two aspects of your reno that are most important to you, and saving other changes for another time.

3. Getting Creative

To keep your costs down, try thinking outside the box. Say the countertop you really want is way out of your budget. Perhaps your contractor may know where to find salvaged materials at a deep discount. Or the cabinets you had your eye on have jumped in price. Opting to reface instead of replace your existing cabinetry could be a reasonable, cost-effective approach. Being open to these kinds of options can really help keep your spending in check.

4. Doing It Yourself

DIY can be a great way to keep inflation from ruining your kitchen budget … if you know what you’re doing. There are millions of how-to videos online with detailed instructions on everything from putting in new flooring to installing sinks. One of the largest costs of any renovation is labor, and you can reap some significant savings by doing some of the things yourself, and saving the really hard stuff for a contractor. Keep in mind, though, that taking on tasks outside of your abilities could end up costing you in the end, so be realistic about what projects you can handle and which are better left to the professionals.

💡 Recommended: How Much Does it Cost to Remodel a House?

5. Considering Temporary Fixes

Can you update your cabinets and countertops with removable materials? Or perhaps a new coat of paint and some new pulls? Peel and stick wallpaper has become particularly popular due to its variety and flexibility. It comes in countless prints from wood grain to marble, and can be used as a backsplash, on countertops, kitchen cabinets, and yes, walls. Incorporating one of these simple changes can give your kitchen a fast and financially friendly refresh.

6. Renovating vs Remodeling

Yes, there’s a difference, and the distinction is important. If you are remodeling, you are changing the physical space, breaking down walls, removing cabinetry, etc. Remodels are almost always more labor intensive, require more materials, possibly permits, and definitely more of your contractor’s time, so they are almost always more expensive, even without inflation. Renovating, however, means you are updating what already exists. In this scenario, it’s often easier to pick your battles — keep the cabinets but change the countertop, for instance. So, if you really want to keep costs down, you may want to consider renovating cosmetic features instead of remodeling.

7. Consider a Loan

If you can’t wait to renovate but don’t have all the cash you need, you could consider getting a personal loan to cover the costs. If you’ve made enough mortgage payments, tapping into your home equity could be another option for funding your project. There are both benefits and drawbacks to borrowing so be sure to read the fine print, keep a close eye on interest rates and do your best to keep your project on track and under budget.

8. Increase Your ROI

Tapping into a mortgage refi or getting a personal loan might seem risky, but it can make sense if you’ve considered how much your home improvement may boost the value of your home when it comes time to sell it. Using a home improvement ROI calculator can help you estimate how much value you can add to your home after a renovation or remodel.

Another metric you may want to consider is the return on investment, for a particular project. Boosting your curb appeal — that is, the exterior of the house — can give you the most bang for your buck. So can things like replacing a garage door, sprucing up the yard and landscaping, and even painting the exterior of the house. And even a minor kitchen renovation can boost your home’s value, potentially offsetting any inflation costs you may incur.

9. Choosing The Right Contractor

Once you’ve decided what you want to do and what you can afford, it’s time to find a good contractor to execute your vision. This one decision can make or break the entire project, so it’s wise to ask for personal referrals. If that’s not an option, you can always search the top-reviewed contractors in your area. And just like comparing prices at the grocery store, getting estimates from at least three contractors can help you save.

The Takeaway

Inflation might be sky high right now, but it doesn’t have to stop you from having the kitchen of your dreams. Whether you are going for a full remodel or a few cosmetic changes, there are ways to update the look of your kitchen without breaking the bank.

And should you decide to pick up a personal loan to cover those costs, be sure to budget a little extra for the “just-in-case.” SoFi’s home improvement loans range from $5K to $100K and can cover just about any kitchen project. Plus, with no collateral and same day funding, you can kick off your project sooner and can find yourself cooking in your new kitchen in no time.

Learn how a SoFi home improvement loan may help you fund your remodel in no time.

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Photo credit: iStock/sturti

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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.

SOPL0622012

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