Refinancing credit cards
Refinancing a credit card is a convenient service for those users who find themselves in a difficult financial situation. Banks offer you to repay your old debt and apply for a new loan on more favorable terms. We will tell you in which financial institutions it is better to carry out the operation.
What is credit card refinancing?
This service involves making a new credit card or consumer loan. The old debt is repaid with a new financial offer. The debt for the old credit card can be paid directly by the bank or by the client.
Refinancing is also called refinancing or re-accreditation. This service can be refused in some situations. For example, because of a bad credit history or poor solvency.
If you refinance a loan, you sign a new contract, which includes all the conditions and repayment schedule.
Why do banks refinance credit cards?
The main purpose of refinancing is to improve the credit conditions. There can be several specific reasons for registering the service:
- There are more attractive offers in the banking market – with a lower interest rate. If the interest rate is lower by 3-4 points, the savings will be significant;
- There are several loans and credit cards and it is easier to combine them into one debt, so as not to confuse the days of repayment and not to increase debt due to delinquency;
- The need to change the currency of the account. This is especially true for those who issued a foreign currency card, and the dollar or euro exchange rate became unstable;
- Wanted to reduce the cost of card maintenance and switch to a lower level, for example, from Platinum to Classic. The annual maintenance cost will be considerably lower;
- You need to lower your credit load and, therefore, change your terms in order to reduce the regular payment.
You can apply to a third-party bank or the same credit organization that issued the card to refinance it. The choice should be based on where it is more financially advantageous. This can be done by calling different banks and asking them to calculate the terms.
Features and Conditions of Credit Card Refinancing
In order to get approved for an application, you need to meet some of the bank’s conditions:
- Have a good credit history;
- Timely payments on the credit card to be repaid;
- To be solvent (usually banks approve application of those, who are officially employed and have not less than six months of experience in the last workplace).
In addition to solvency, the ratio of current debt to income is also important. Salary may be high enough, but the debt can exceed it several times.
The above list is a tentative one. Each credit organization may have additional conditions.
Steps of credit card refinancing
The scheme of refinancing in Russian banks is the same except for some nuances, which depend on the policies of financial institutions. The stages are as follows:
- Submission of an application: refinancing online to the card or offline in the office. You can choose any bank – the one that issued the card or any other.
- Submission of documents. Minimum – passport, account statement (amount of debt), certificate of salary.
- Application processing: an application to the Bureau of Credit Histories and check the previous debts. Apart from the credit history other data is checked to see if it is reliable. If the checkup is successful, the application is approved. The client gets a call from a manager or an automatic message on the phone or to an email address.
- Drawing up a new loan agreement and payment schedule.
- After signing a written agreement, the money to repay the debt is transferred by bank transfer.
The last obligatory step is to draw up a certificate about the full repayment of the debt. This certificate has to be submitted to the bank, where the refinancing has been arranged. It is also important to return the credit card to the organization that issued it, and fix it in a document. The fact is that the lender should be sure that the limit on the old credit card will no longer be renewed.
If all the supporting documents are not prepared, the bank may worsen the terms of refinancing. For example, raise the interest rate by several points.
How to choose a credit organization?
To determine the financial organization, you can read about credit card refinancing customer reviews on the Internet. And not only about this particular service, but also about the service of the bank as a whole, as well as view its financial ratings to form a picture of its reliability.
But it’s better to be guided by specific data – the size of the interest rate, the maximum loan amount, repayment period, currency, etc.