Should I Refinance to Pay Off Credit Card Debt in Alberta?
Short answer
It can help monthly cash flow if you have enough equity and still qualify, but it can also stretch short-term credit card debt over many years. The lower payment is not automatically total savings.
The plain-English version
Credit cards often have much higher rates than mortgage debt, so consolidation can reduce monthly pressure. The trade-off is amortization: debt that could have been paid off in a few years may become part of a long mortgage.
A good review compares current debt payments, new mortgage payment, penalty, total interest, and whether the cards will stay paid off.
Alberta-specific considerations
- Usable equity is commonly limited by appraised value and refinance loan-to-value rules.
- If you are mid-term, mortgage penalties can affect the decision.
- Income and credit still matter; equity alone does not guarantee approval.
Example scenario
A homeowner with $35,000 in credit card debt might lower monthly outflow by consolidating, but if they keep using the cards afterward, they can end up with a larger mortgage and new card balances.
Common mistakes to avoid
- Treating lower monthly payments as true savings.
- Not closing or controlling credit cards after consolidation.
- Ignoring the refinance penalty.
- Rolling debt into the mortgage without a repayment plan.