How do I Refinance a Line of Credit?

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  • Written By: Diane Goettel
  • Edited By: W. Everett
  • Last Modified Date: 05 February 2020
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Refinancing a line of credit basically means developing a new relationship with a bank or credit card company so that they will take over a current line of credit, especially if there is debt attached to that line of credit. It is most common for people to refinance a line of credit in order to get a lower interest rate on their debt. Banks and credit agencies that are looking to gain new customers by offering to refinance a line of credit will sometimes offer very low interest rates for the first six to 12 months, followed by an interest rate that is lower than the potential customers are currently paying. It is important for those looking to refinance a line of credit to make sure that the new bank or credit agency is not offering a low teaser rate that will jump to a rate higher than what they are currently paying after an initial honeymoon period.


One of the most important parts of successfully refinancing a line of credit is research that will allow one to find the right credit agency or bank and the right credit card for one's needs. The best way to refinance a line of credit is usually to find a new line of credit that has a higher limit and a lower interest rate than one is currently paying. It is possible to merge a few lines of credit into one if the new interest rate is good enough and the limit is high enough. This is something to discuss with one's new or potential bank or credit agency.

The main goal for many people who want to refinance a line of credit is to reduce their monthly payments and reduce the amount of interest they will pay in the long run. A good way to find out whether it makes sense to refinance a line of credit, use a debt calculator to figure out how refinancing will help to save money in the long run. There are a number of free debt calculators online that are easy to use and offer very helpful information. It is important not only to get a better rate and pay less interest in the long run, but also to make a plan to pay of the debt. While it may be helpful to refinance a line of credit, the next step is to pay off the debt as quickly as possible, which usually means paying more than the minimum.



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