Debt consolidation and credit card refinancing are both methods to convert credit card debt into a single personal loan.

The goal is usually to save money with a better interest rate and simplify the repayment process with one monthly payment, instead of juggling multiple payments. However, there are pros and cons to consider before taking on either one. 

Here’s what you need to know about debt consolidation vs. credit card refinancing.

Consolidating credit card debt involves taking out a personal loan to pay off one or more credit card balances. Instead of making payments on multiple revolving credit lines, you’ll have one installment loan with a fixed rate and payment. It gives you a clear payoff timeline for your debt, rather than managing multiple credit cards and different interest rates. 

You can apply through online or traditional lenders, where you’ll find general personal loans that can be used for virtually any purpose, or credit card consolidation loans specifically for paying off existing balances. Credit card debt consolidation is best for people who want a structured timeline for their debt payoff.

Related: Learn more about getting a personal loan on Credible.com

Credit card refinancing is similar to consolidation: You take out a new loan with new terms for your outstanding debt. You can still refinance multiple credit card balances with a single loan, giving you the simplicity of one payment each month. And you may be able to qualify for a lower interest rate to help lower the overall cost of your debt. 

Another option for paying off your credit card debt is getting a balance transfer credit card. It’s similar to refinancing except that instead of taking out a loan, you move your outstanding credit card balances to a single credit card. 

Many balance transfer credit cards offer low-interest or zero-interest introductory rates for a set period of time, usually a year or more. During that time, you can avoid paying any interest if you opt for a 0% APR balance transfer card.

There are some downsides to this option. First, many credit cards charge a balance transfer fee. It’s usually a percentage of the amount you’re transferring, but sometimes it can be a flat charge. The fee is added to your balance, increasing the amount you owe.

In addition, if you don’t pay off your balance within the introductory period, you’ll have to make payments at the card’s regular interest rate, which can be even higher than your original credit card’s rate. This can trap you in a cycle of debt.

Here’s a quick side-by-side comparison of credit card refinancing and balance transfer credit cards: 

A home equity loan, also known as a second mortgage, is when you take out a lump-sum loan using your home as collateral. To estimate your equity, you’ll subtract your current mortgage balance from the value of your home. For instance, a homeowner whose property value is estimated at $500,000 and who has a $250,000 mortgage balance has $250,000 (50%) in home equity.

Most lenders require you to have at least 15% to 20% equity in your home. You can generally borrow up to 80% of your equity. So, if you have $250,000 in equity, you may apply to borrow up to $200,000 with a home equity loan. 

Just remember that you also need to meet other criteria to qualify. A second mortgage must be in line with the lender’s acceptable debt-to-income ratio (your monthly debt payments divided by your monthly income), and you’ll need good credit to qualify for the lowest rates.

Once approved, you can use a home equity loan for virtually anything you want, including consolidating your credit card debt. The main benefit is that the interest rate will likely be much lower than that of a credit card. 

The downside is that you’re using your home as collateral, turning unsecured debt into secured debt. If you fall behind on your payments, you could risk going into foreclosure and losing your home. 

Debt settlement is when you (or a company you hire) negotiate your outstanding credit card balances to a lower amount. You typically agree to pay a lump sum that’s less than what you currently owe. While it sounds like a great idea, there are a number of drawbacks to consider. 

First, debt settlement companies generally charge high fees. This isn’t ideal in a situation where you’re trying to reduce the amount of money you owe. There’s also no guarantee that you’ll be successful in negotiating a lower payment, and your creditors may not be willing to work with the debt settlement company you select.. 

Additionally, many debt settlement companies advise you to stop making payments altogether. The idea is to divert all of that saved money into an account that’s used to pay the settled balance. This can lead to late payment fees and penalty interest, which can lower your credit score. It can take years to recover from such a negative impact on your credit report. 

While debt settlement may be something to consider in very extreme situations, credit card debt consolidation and refinancing are generally safer choices. 

Related: Learn more about getting a personal loan on Credible.com