Kredittkort refinansiering is not a new concept. It is a step consumers take when looking to make their interests more favorable. Although a specific rate may sound good at one point in time, the future will probably show you that you can do better, because all things change constantly, including the market situation and offers you can get on those cards. So, if you agreed on a specific rate in the past when getting your kredittkort and now you realized that it isn’t as favorable as you’d like it to be, and as it can be for that matter, you’ll want to start thinking about refinancing.
Going into this process, though, without fully understanding it can easily lead to you making mistakes and not getting any better terms than the ones you have right now. If you’re unable to make payments on your high interest cards, you’ll get penalized for it, meaning that your debt will increase much more, making it difficult to get out of the vicious cycle you’ve gotten yourself into. A cycle of debt that could be broken with refinancing, but only if you do it the right way. Not doing it correctly could complicate your situation even more, and doing it correctly will require you to understand the process fully, figure out if this is a favorable option for you and how to actually choose the best offer. Those, and some more common questions will be answered for you below.
What Does It Mean To Refinance A Credit Card?
Starting with the basics. What does it precisely mean to refinance your kredittkort? Essentially, it means borrowing money, i.e. getting a loan, to get rid of your credit card debt. The aim here is to reduce your overall debt and your costs for that matter, potentially saving money in the long run. No. Definitely saving money in the long run, especially if you’re all tangled up in the debt, being late with your payments and constantly seeing the debt increase even though you’re doing your best get rid of it.
While the term refinancing can also be used in connection with other personal loans and mortgages, in this case it is directly related to your credit cards. Basically, you get a loan with better rates and generally better borrowing terms, then use it to pay off your kredittkort debt, being left only with the new loan to repay, the terms of which will be much better when compared to those that you struggled with on the credit cards. Given that it offers the option of saving money and getting out of debt, refi is pretty popular among all of those people who’re struggling with multiple credit card debts.
Can You Do It?
Are there any prerequisites for taking out a refi loan to get rid of the kredittkort debt? Sure there are. Lenders aren’t that interested in working with borrowers that they aren’t sure will manage to repay the loans, especially when talking about those that are not secured, i.e. that are not backed by collateral. Apart from the common requirements, i.e. the fact you need to be of certain age and your income has to pass a certain limit, your credit score is the main prerequisite to consider here. Having a great score will qualify you for a great refi loan, while also making it easier for you to obtain better interest rates, that could go even as low as 5%. Compare that to your current credit card rates.
But, Should You?
It’s clear you can do it, but here’s a better question. Should you? Well, if you’ve done the comparison I’ve told you to do above, i.e. between the lowest possible interest rate on your unsecured personal loan you can use for refinancing and between your credit card rates, then you understand clearly which option is more favorable. Even if you don’t get the lowest rate, which, admittedly, could be a long shot, the rate will still be somewhere between 10% and 14%, which is also lower than on credit cards. Thus, looking from that angle, this is certainly something you should do.
Having just one card with a high interest rate will put you in great debt, and you’ll keep owing the company a lot even though you’ll be making payments as best as you can. Remember the vicious cycle I’ve explained above. Having multiple cards with the same issue just makes things worse. Refinansiering can help you save quite a lot of money, thus, especially if you have more cards to worry about, since you’ll essentially get just one loan to cover all the debts, and that one loan will have a lower interest rate than the ones you’re paying on your kredittkort. Saving money, of course, is everyone’s goal, so it’s clear that refinancing is beneficial in that regard as well.
How To Refinance A Credit Card?
Deciding to do this is the first step of the important process, but there’s a lot more to do before completing it. Snapping your fingers and expecting things to be done on your behalf is not possible. Putting the necessary effort into this, however, will pay off, because you’ll get out of the terrible debts that are burdening you and finally start managing your budget much better. If you visit a few relevant sites talking about kredittkort refinansiering, you’ll realize that the option is pretty common nowadays and that there are numerous lenders offering their refi solutions to consumers who want to get out of the mentioned debt.
Choosing one among those multiple lenders, and thus choosing the best offer, will naturally be the first step here, but I’ll talk in more details about how to make that choice later. For now, all you need to know is that this is a crucial step in the process. Focusing on some other important steps, though, is also necessary, since your goal is to get the best refi solution, and you’ll need to work as much as you can on your own financial situation to improve the chances of getting that best offer. Naturally, since you’re in great debts, you won’t quite be able to improve your credit score that much, but even little changes can make a huge difference in your situation.
Deciding if you want to go for a secured or an unsecured refi option is also a must, and the secured one is usually cheaper, given that it involves pledging one of your assets as collateral. If you default, the lender will get to take that asset away from you. The unsecured one is a bit more expensive, but it’s also a great refi option for most people, both those who have no assets to pledge as collateral and those who don’t want to risk any of them. After having decided on this and, of course, after having chosen the best option, the application procedure will be quite simple, and there will be a short waiting period before getting approved and getting the money you’ll then use to pay off your credit card debts.
How To Choose The Right Refi Offer?
Selecting the best refi offer is, naturally, a crucial point here, since you want great interest rates and all other borrowing terms, so as to make the refinansiering worth your while. Finding the best offer, naturally, depends on finding the best lender, and you can do that by searching for them online, by talking to other borrowers and, of course, by comparing all of the offers you’ll get from the different lenders. Comparing will lead to realizing which one’s best for you, i.e. which lender offers you the perfect rates, which will ultimately lead to choosing the right solution and being completely satisfied with the refinansiering process that you’ll actually go through. So, be patient, compare and choose wisely.