How do I know if I should refinance my debt?

Refinancing works best as part of a larger plan to become debt-free; it shouldn’t just be a way to buy some breathing room.

If you are consolidating debt just to get a lower interest rate without really knowing how you’re going to pay the debt off, then you are simply moving the problem around instead of facing it. You’ll have to change the behavior that got you into debt in the first place.

If you think you can successfully manage your debt, then ask yourself a few more questions.

Can I pay off the debt in six months to a year? - If the answer is yes, it may not be worth the time and effort to consolidate. You might end up paying a few extra bucks of interest, but probably not much more.

Can I get a lower interest rate on my current debt just by asking? - You can always try calling up your credit card issuers and requesting lower interest rates. If you’re a longtime customer and have paid your bills on time, you stand a chance.

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