If you are handling credit cards and happen to be in debt, that are two primary options that you can undertake. One is refinancing and the other is consolidation. It is important to understand these two terms because they have similar meanings. Credit card debt impacts many, and if you have trouble understanding interest rates or need help paying it off, experts at Golden State Partners can assist you in this regard.

What you choose can make a big difference in terms of interest rates and the time it will take for you to pay off the card. Here are the biggest differences between the two.

Refinancing

Also commonly referred to as a balance transfer, credit card refinancing entails moving the existing balance on a credit card from one to another that has more favorable pricing. For example, this means that you could potentially move a $5,000 balance on a credit card that has an 18% interest rate towards a credit card that has a 10% interest rate.

There are many credit card companies that offer a 0 percent introductory interest rate as a special incentive to use their card as the medium to transfer the balance.

The goal of refinancing is to lower the interest that you pay on the credit card. This option, in general, tends to be less effective than consolidating because all you are really doing is just transferring a balance from card to the other. You will see the major difference with consolidation, even though it sounds similar on the surface.

So with refinancing, you will be able to seamlessly move your card balances and if you happen to move the balances onto a card with a 0% interest rate, you can focus making your payments on just the principal alone. However, the biggest question with 0% interest rate credit cards is whether or not you will qualify. A pretty decent credit score is typically the requirement. If you don’t pay down debt, high-interest rates will come back to haunt you when the grace period has ended.

Credit card debt can be difficult to manage, but help from Golden State Partners can assist you with these troubles.

Consolidating

With debt consolidation, you are moving multiple credit card balances into a single loan that has one monthly payment. This can usually be accomplished by moving small credit card balances to one credit card that has a very high credit limit. Usually, this is accomplished through the use of a personal loan.

These personal loans are unsecured and come with a lot of risks, but can also offer fixed monthly payments, fixed interest rates, and a specific loan term. What this means for you is that you will have the same monthly payment with the same interest rate for every month until this loan is repaid in full.

In summary, interest rates will be lower than what you will have been paying on credit card balances, and you will know in advance what you are paying. On the flip side, applying for unsecured personal loans to make this happen will also require you to understand all fo the terms of the loan. There will also be even more added expenses to what you’re paying on the credit card itself