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Can You Refinance a Credit Card?

Refinancing your credit card takes creativity, but it can save you money.

Justin Cupler

Contributing Writer at Tally

July 16, 2021

When financing a home, if the interest rates drop in a few years, you could refinance your mortgage into a new loan at a lower rate. This can reduce your payment and bring down the overall cost of the loan. 

But can you refinance a credit card in a similar way? With revolving debt, like credit cards, the interest rates don’t necessarily rise and fall on cue, nor are there clearcut refinancing options to reduce your rate and save you money. However, there are other ways to roll your high-interest credit cards into more favorable financing terms, which is effectively the same as refinancing your credit cards. 

Keep reading to understand the various refinancing options, how they work and what pitfalls to avoid.

Can You Refinance

While it’s slightly different from refinancing a home loan or an auto loan, you can refinance a credit card. Refinancing a credit card can help lower your annual percentage rate (APR), convert interest from variable rate to fixed rate, reduce your number of credit card payments and more. 

Here are various refinancing options for your credit card. 

Debt consolidation loan

While debt consolidation is often viewed as a debt relief method, it is essentially a form of refinancing. You’re taking one or more high-interest credit cards and financing their balances with a personal loan that likely has a lower interest rate and fixed repayment terms. 

There’s a wide range of debt consolidation lending options, including traditional banks, credit unions and online lenders. Your terms will vary depending on your credit rating, but the average debt consolidation loan interest rate ranges from 15.85% to 35.13% APR. However, you may find some as low as 5.99% APR. 

Before committing to a credit card consolidation loan, consider reviewing the loan details to verify the interest costs and total loan costs will be less than you’d pay without consolidation.

Home equity loan

Your home’s equity — the difference between your mortgage balance and the home’s market value — can act as a resource for refinancing credit card debt. You can tap into this equity via a home equity loan (HEL) and use the loan proceeds to pay off your credit cards. 

Because an HEL ties to your home, the interest rate is generally significantly lower than a credit card, ranging from 3.25% to 7.74%. The downside is using a home equity loan requires your home to be used as collateral, so if you default on the HEL, the lender can foreclose on your property. 

There are various avenues to getting an HEL, including your existing mortgage lender, other banks, credit unions and even online lenders. 

Home equity line of credit

home equity line of credit (HELOC) taps into your home’s value just like an HEL, but instead of offering you a lump-sum loan, a HELOC gives you access to a credit line you can use, as needed, to refinance your credit cards. 

HELOCs come with a draw period that can last up to 10 years. During this time, you can withdraw money from the HELOC up to the credit limit to pay off credit cards. Most lenders require interest-only payments on the amount you draw during this period, but you can always pay extra to reduce the principal balance. Once the draw period closes, the lender will require principal and interest payments. 

Like an HEL, a HELOC offers a low interest rate, ranging from 1.99% to 6.85%, but it also uses your home as collateral, which means you risk foreclosure if you default. 

Personal line of credit

A personal line of credit is another way to refinance credit card debt. It’s similar to a HELOC in that you have access to a pool of cash to pay off debt and make payments based on the amount you use. Unlike a HELOC, though, a personal line of credit is an unsecured debt, so your home isn’t used for collateral. 

You can apply for a personal line of credit from a wide range of lenders, including traditional banks, credit unions and online lenders.

For example, Tally offers a personal line of credit1 for those who qualify that can help pay down credit cards. You typically need a FICO credit score of 660, so even borrowers with fair or average credit may be eligible. With a personal line of credit from Tally, you only need to make one monthly payment, then the funds are then distributed to all your credit cards for you, streamlining your monthly bills. 

Balance transfer credit cards

You can even refinance credit cards using other credit cards, thanks to balance transfer credit cards.

These credit cards not only allow you to transfer balances, but they also often include special financing rates for these transfers. In some cases, these special transfer APRs are as low as 0%, meaning you pay no interest at all. 

These APR deals are for fixed periods — typically six to 18 months — and the APR will convert to the credit card’s standard rates after the promotional period expires. 

While paying little to no interest might be a great fit, these credit cards often require good credit or excellent credit to qualify. Also, credit card companies usually charge a 3% to 5% balance transfer fee. So, if you transfer $1,000 from one credit card onto a balance transfer card, you may incur a $30 to $50 charge. Consider the overall cost of a balance transfer credit card, fees included, to ensure that you’re not paying more on your balance in the long run.  

What to Look Out for When Refinancing

Refinancing credit card debt could save you lots of cash on interest charges, but it’s not without its pitfalls. Here are some issues to watch out for in credit card refinancing. 


While a 3% to 5% balance transfer fee is nothing to worry about in most cases, other fees may cancel out the benefits of refinancing. 

It’s not unusual for debt consolidation loans, HELs and HELOCs to include lender fees, such as origination fees, annual fees and other lender fees. Watch out for excessively high fees and factor these charges in when determining if you’re saving money by refinancing your credit cards.  

Stretched loan terms

Many loan shoppers simply look at the monthly payment and base their decision on that. While this can help with balancing a budget, it can often throw off one of the main benefits of refinancing or consolidating: saving on interest charges. 

Lenders can make a loan look more appealing to borrowers by stretching out the repayment terms and lowering the minimum payments. Those lower payments may look great initially, but the longer you stretch the payments, the more interest charges you’ll pay throughout the loan. 

Using a loan calculator, you can determine how much you’ll pay in total interest throughout a loan. You can use this number to shop against other loan offers to ensure you’re getting the best deal possible. 

Refinancing a Credit Card Takes Creativity

Can you refinance a credit card? Yes, but it’s not like refinancing a home, where you simply go to a mortgage lender and tell them you want to refinance into a new loan. Refinancing a credit card takes a little more creativity and calculation to find the right option for you. 

There are plenty of options, including:

  • Debt consolidation loans

  • ​Home equity loans

  • Home equity lines of credit

  • Personal lines of credit

  • Balance transfer credit cards

When choosing the right option for you, compare interest rates and the total cost of the loan, including all the associated fees. In some cases, a loan may look like a great deal because of a low monthly payment, but stretched loan terms or hefty fees may push the total costs so high it’s no longer worthwhile.

With the right credit card refinancing option, though, you could be out of debt quicker and with fewer interest charges and other fees.

If you’re looking for ways to make repaying your credit card debt easier, consider Tally. The smart debt repayment tool allows you to assemble your credit card debt all in one place, automatically paying off your cards to get you out of debt faster.  

1To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) Will be between 7.90% – 29.99% per year, and will be based on your credit history. The APR will vary with the market based on the Prime Rate.