Credit Card Debt Refinance
If you have incurred quite a lot of debt on your credit cards, you are hardly all smiles. Even if you don't worry too much about it, debt is there and month by month it grows like a snowball because the interest constantly adds to the principal and if you don't make something to stop it, soon you will find yourself paying incredible amounts of money. Needless to say, it is better to start swimming before you sink than to expect a miracle to push you to the top.
There are many steps you can make in order to avoid drowning in credit card debt. There are even more to get you out of credit card debt. However, most of the steps depend on the extent to which you are in debt. It is different when you are one or two payments behind and you owe $500 or so and when you are late more than a half year and your debt exceeds $10,000. In some cases you just have no other choice but to file for bankruptcy, while in other credit card debt consolidation or refinance is exactly what you need.
Usually consolidation of credit card debts is recommended when you have many creditors and you need to consolidate your ten or twenty separate monthly payments into one single payment and the interest of this payment is lower than the interests of the separate payments. To some extend, credit card debt consolidation includes refinancing because you hunt for a credit with a lower interest rate. Consolidation is more complicated than refinance and it takes more time and efforts to consider taking a consolidation loan than a refinance one.
Refinancing could also be a tough decision, though, especially if you consider it for large amounts of money. There are many refinance options and some of them are suitable for smaller amounts only, while the others are worth only for $20,000 or more.
The simplest refinance option is to get a balance transfer credit card – preferably a zero-interest or a low-interest one. The idea is that when you transfer your old balance to the new card, you will benefit from lower or zero interest rates. However, beware of traps like short introductory periods or sudden sharp increases in the interest rate, if you are late with a single payment.
Personal loans are another unsecured type of credit you can resort to in order to cover credit card debt. The idea is similar – you get a new loan with a lower interest rate and probably with a grace period to repay your old debts. You save because you pay considerably less interest.
As far as lower interest rates are concerned, nothing beats a home mortgage loan. This is a secured type of loan and the asset you provide to guarantee that you will pay back is your home. The interest rates are as low as 6% but the risks for you are much higher than with the other types of refinance. Home mortgage loans are advisable when your debt is over $20,000 because in this case the risk of losing your home is more justified. If your debts exceed $20,000, you could also consider bankruptcy but in the case of bankruptcy there is still no guarantee that you will keep your home, while with a mortgage, if you pay your installments regularly, you will be able to repay your debts and keep your home.
As you see, there are many refinance options for you to consider, including the option not to refinance. On the other hand, the choices you have, make it more difficult to decide which way to go. If you can't make up your mind on your own, go to a professional consultant and with his or her help you will be able to regain your financial freedom.