Credit Card Refinancing: Pros and Cons

It’s easy to get in over your head with credit card debt. Whether it was due to an emergency, a job loss, or a simple case of too much shopping therapy, credit card bills have a way of piling up. Interest rates have a way of piling up, too. As your interest rate climbs, less and less of your principle is getting paid off each month. It can be a vicious cycle but you may be able to slow it down by refinancing your credit cards.

What is credit card refinancing?

Credit card refinancing usually involves transferring your credit card debt into a new credit card. Many credit card companies offer low or no interest rate credit for the first few months when you transfer your balance from another card. This can save you money on interest each month for as long as the introductory period lasts, and help you pay off your card sooner. 

Be careful, though – these perks don’t last forever.

How can credit card refinancing help me meet my goals?

If paying off your debt is one of the goals in your personal finance journey, credit card refinancing may help you get there sooner. 

Each month, the balance on your credit card is accruing interest. Even if you make your minimum payment each month and stop making purchases with it, it could take years to pay off your credit card. 

For example, if you have accrued $100 in interest over the month and make a payment of $125, that $125 payment only truly pays down your debt by $25. The next month, you’ll accrue almost the same amount of interest. Paying off your credit card this way could take much longer than you ever imagined.

Refinancing your credit card to one with a 0% or low-interest introductory rate means more (or all) of your monthly payment lowers the balance on your card.

Who should consider credit card refinancing?

If you’re serious about getting rid of debt, credit card refinancing could help you move in that direction a little quicker. If you’re juggling several credit cards from different companies, refinancing them into a single credit card payment could save you time and make paying bills simpler each month. 

This credit card tactic may be best for cards with small balances that you’ll be able to pay off within the introductory interest rate period. This is typically anywhere between six and eighteen months, but sure to read the fine print.


Refinancing your credit card can save you money by reducing the credit card interest on your debts and helping you pay off your cards sooner. You can choose what you’d like to refinance, whether that’s just one high-interest rate card or several cards. If you do have several cards to refinance, you may be able to roll them all into the same new credit card, letting you pay one simple monthly payment. 

Another pro of refinancing your credit card onto a different credit card is that it is unsecured debt. You don’t have to put up your home or other property as collateral, so if something happens and you’re unable to make the payments your home won’t be at risk.


Credit card refinancing can be a risky tactic. It's important to know what you're getting yourself into before you take the plunge.

Before you sign on the dotted line, make sure you are fully aware of the fine print on your new credit card. How long does the introductory interest rate last? Can you afford to pay off your debt in that time? And, if you can’t, it’s important to understand what happens to the interest.

First, the interest rate could skyrocket after the introductory term. Make sure you know what this rate will be and when it starts so you’re not caught off guard.

Second, the company could charge you deferred interest if you don’t pay off your balance transfer within the introductory period. The bill they send you each month may not show the full amount you ought to pay to pay off your debt in the introductory period. Make sure you do the math to know how much your payment ought to be to get your card paid off in time.

Third, there may be a balance transfer fee involved. You don’t want to be surprised with an additional charge on your first bill, so make sure to look for these before you agree to the transfer.

Credit card refinancing can be a helpful way to save yourself some money and get your cards paid off. Just make sure you fully understand the terms of your new credit card and what will happen at the end of the introductory term.