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What Is Credit Card Refinancing?

6 min read

Last Updated: May 2, 2025

Table of contents

Key Takeaways

Credit card refinancing transfers a debt to a lower-interest credit card.
You might be able to lower your monthly payments by moving debt from multiple credit cards.
Factors like balance transfer fees, the limited offer period, and the standard purchase APR are important to consider before refinancing.

Some people find credit card debt to be stressful. Certainly high interest rates don’t make it easier. Credit card refinancing (also known as a balance transfer) offers a way to shift high-interest credit card debt to a new credit card with a potentially lower interest rate.

Credit card refinancing defined

Do you have a balance on one or multiple credit cards? You might be able to transfer that debt to a different credit card with a low-interest balance transfer option. Refinancing means applying for a new credit card, after which the credit card company will conduct a hard credit inquiry to review your credit history.

A balance transfer may help ease the stress of increasing interest charges. It can also give you a chance to focus on debt relief with fewer due dates to manage and a lower monthly payment.

Reasons to consider credit card refinancing

You're paying high interest: If you carry a balance it could cost you heavily in interest. Let’s say you have a card balance of $2,000 with an Annual Percentage Rate (APR) of 20%. Paying your balance off over 12 months will cost $222 in interest.

Tip: you can calculate the credit card interest you'll owe on any given balance and interest rate. Try our free credit card interest calculator.

You have a high credit utilization ratio: The percentage of available credit you’re using is known as your credit utilization ratio. To calculate, add your outstanding credit balances and divide that number by your total credit limit for all your accounts.

Credit utilization is one factor that credit reporting agencies use to calculate your credit score. A higher ratio might negatively impact your credit score. The Office of Financial Readiness suggests a credit utilization ratio of 1-10%. If you can reduce your existing debt, you could raise your credit score and build a good credit profile.

You have too many payment due dates: Multiple cards may mean you have several payment due dates to keep track of. By consolidating your debt on one card, you could simplify when payments are due, potentially making it easier to budget.

What are the pros and cons of credit card refinancing?

Refinancing through balance transfer credit cards can be effective for many people. However, it’s good to know this strategy has pros and cons.

Pros: Refinancing may allow you to concentrate on paying off your balance by reducing interest for a fixed period. Saving on interest allows you to pay down your credit card balance faster. The process of applying for a new credit card, getting approval, and transferring your balance can be comparatively quick and easy.

Cons: The intro APR only lasts for a fixed period. You’ll need to repay the outstanding debt within the promotional period or risk incurring further interest. The balance transfer fee can also be a deterrent if your debt is high. It’s a good idea to look closely at the terms and conditions of your card since promotional APRs don't always apply to purchases. If your card doesn’t have an intro purchase APR, the intro APR is not valid when you make purchases.

How to refinance your credit card debt

Start by looking for balance transfer cards with a low interest rate or 0% intro APR period. Remember that you’re also looking for low fees and a reasonable standard APR in addition to a longer low-APR offer period.

Once you’ve found the right card for your spending style, you’ll need to apply for the card and get approval. Once you open your account, you can make your balance transfer request. You might have the option to do a balance transfer online or over the phone.

With Discover, an account must be open for 14 days before Discover can begin processing your balance transfer request. After that, most transfers are processed within 4 days.

Did you know?

As a Discover^® Cardmember, you can request a balance transfer online or through the phone number on the back of your card. Avoid paying the standard interest rate by paying off the balance before the introductory period expires.

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Finding the best credit card for you

It’s crucial to find the right balance transfer card offer to quickly and effectively pay off an outstanding balance. Typically, you’ll have to pay a balance transfer fee of 3% to 5%, so ensure that the fee is affordable for you. Read the terms and conditions of potential cards closely; you’ll need to understand if the promotional APR applies to new purchases on the balance transfer card.

Another important thing to consider is how much interest you’ll pay on the new card. A low intro APR offer allows cardmembers to enjoy low-interest balance transfers and purchases for a limited time.

You’ll also want to know if the standard purchase APR that applies at the end of the promotional rate period is good for you. Also consider any rewards programs that the card offers and see what type of card best matches your lifestyle.

Another good idea is to seek out a card with no annual fee where possible. Discover has no annual fee on any of our cards. Along with no annual fees, to help with your goal of paying off your entire balance, looking for cards with a long offer period will give you more time to do so.

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Alternatives to credit card refinancing

Some people move their debt through a debt consolidation loan. This means you pay off outstanding credit card balances with either a home equity loan or a personal loan. Debt consolidation may streamline your repayment process and offer better interest rates. Note that home equity or personal loans may also come with additional costs such as processing fees.

Unlike refinancing, it’s not guaranteed that you’ll pay lower interest. However, loans typically come with a longer repayment term. The terms of a personal loan vary from bank to bank and may depend on your credit history and financial situation.

The bottom line

When you move high interest debt with a balance transfer, it can be a great way to refinance credit card debt. A fixed intro APR period on a balance transfer credit card could be a great debt relief strategy. A debt repayment strategy may help you pay down your debt faster.

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