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A Master of Business Administration (MBA) is a highly valued degree in the business world and can put you on a path to a successful and high-paying career. However, these degrees don’t come cheap. In fact, the total cost of an MBA in the U.S. can range from around $78,000 (for in-state students at a public school) to $270,000 (for a private top tier university), including full-time tuition, mandatory fees, textbooks, supplies, technology costs, and living expenses.

Is it worth it? The answer depends on myriad factors, including what school you go to, what financial aid you qualify for, and your future career goals. Read on for a closer look at the real costs and benefits of getting an MBA.

MBA School Requirements

To be accepted into an MBA program, students typically need to submit proof of a bachelor’s degree from an accredited institution, a personal statement, letters of recommendation, and a resume. Many business schools also require a standardized test score such as the GMAT or GRE.

Once enrolled, full-time MBA students generally need to complete 60 credits over two years. Some accelerated MBA programs may be finished in as little as one year. A part-time MBA program is designed to accommodate working students and generally takes three to five years to complete.

💡 Quick Tip: You can fund your education with a competitive-rate, no-fees-required private student loan that covers up to 100% of school-certified costs.

MBA School Costs

How much an MBA costs will depend on a variety of factors, including school prestige, location, whether the school is public or private, and the program format (e.g., full-time, part-time, or online). MBA costs are also influenced by a student’s ability to qualify for financial aid, scholarships, and employer assistance.

Private and Public MBA Tuition

Going to a public university as an in-state student is often the most cost-effective way to get an MBA. For example, 2025-26 tuition at the University of Michigan’s Ross School of Business was $18,962 for first-year in-state students, compared to $64,556 for nonresidents. Private business schools typically run even higher. For example, the tuition at Columbia Business School was $91,172 for first-year MBA students in 2025-26.

Total Cost of an MBA

The total cost of an MBA degree means more than just tuition expenses. Many MBA students will have to pay for living expenses, textbooks, transportation, and extracurricular activities. This more comprehensive expense list is used to calculate the total cost of attendance.

Additional Expenses (Fees, Books, Housing)

Here’s a breakdown of other approximate costs you can expect to pay per year when pursuing an MBA degree:

•   Fees: $240-$6,470

•   Books & Supplies: $1,200

•   Food and Housing: $16,250-$28,500

•   Loan Fees: $64

•   Opportunity Costs: $160,000 or two years of missed salary

Recommended: Is Getting an MBA Worth It?

How Much Does an Online MBA Cost?

Relocating or commuting may not be feasible for all prospective MBA students. Choosing an online MBA program can offer more flexibility and a lower overall cost for some students. Tuition for an online MBA degree varies widely, ranging anywhere from $11,000 to $126,000 per year depending on the school.

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Cost-Benefit Analysis of Getting an MBA

At the lower end, tuition costs for business schools may come in around $16,400 (for an in-state student at a public university). At the higher end, it can run around $90,000 a year. Total cost of attendance, including food and housing, books, supplies, and other living expenses put the price tag even higher.

Even considering the increase in salary for those who graduate prestigious programs — Yale graduates make a median base salary of $175,000 a year — those upfront costs of tuition can be intimidating.

When weighing costs and benefits, you’ll want to also consider that many MBA programs offer scholarships, based on merit or need. NYU reports awarding merit-based scholarships to 20% to 25% of students, while around 50% of MBA students at Stanford receive need-based aid averaging $50,000 per year.

Average Salary Boost After Graduation

Generally, you can expect a nearly 70% increase in your salary after completing an MBA. Research suggests that MBA graduates earn around $120,000 per year on average, which is $50,000 higher than the average salary of graduates with only a bachelor’s degree.

Keep in mind that a number of things can influence your salary after graduating with an MBA, including the school you attended, the industry you work in, your location, and your pre-MBA salary. Plus, your salary is typically only your base pay. Many jobs for MBA graduates also offer a hiring bonus, stock options, relocation funds, and other high-value benefits, which can significantly boost your earnings.

Time to Break Even on Investment

How long it will take you to break even on your investment in an MBA will depend on the cost of your program and the career you choose after graduation. On average, MBA graduates start seeing a return on their investment (ROI) in five to six years.

Ways to Pay for Your MBA

Assuming you don’t have six figures in savings you can tap to pay for business school, you may need to get creative to cover the costs. Here are some ways to pay for your MBA.

Employer Sponsorship

Employer sponsorship for an MBA involves companies partially or fully funding an employee’s degree in exchange for continued service, typically for one to three years post-graduation. Some employers may require you to sign an agreement that you will repay funds if certain conditions aren’t met.

Student Loans

Depending on your financial situation, you may want to consider applying for a student loan, whether private or federal, to pay for your MBA.

Federal Student Loans

MBA students may borrow up to $20,500 per year in Direct Unsubsidized Loans from the Federal government. The interest rate is currently fixed at 7.94% for loans dispersed by July 1, 2026.

While Federal Grad PLUS Loans will no longer be available as of July 1, 2026, borrowers who already received a Grad PLUS loan before June 30, 2026, can continue borrowing under current terms through the 2028-29 academic year.

To apply for federal student loans for graduate school, you need to complete the Free Application for Federal Student Aid (FAFSA®) form.

Private Student Loans

Private student loans — available through banks, credit unions, and online lenders — can be a key resource for bridging the gap when federal aid, scholarships, and grants fall short. Unlike federal loan options, these loans generally require a credit check and often a cosigner. While terms vary by lender, students can typically borrow up to the full cost of attendance for an MBA program. In addition, some lenders offer specialized MBA loans with tailored repayment terms. Just keep in mind that private student loans generally don’t offer the same borrower protections as federal student loans (such as income-driven repayment plans or loan forgiveness options).

💡 Quick Tip: Master’s degree or graduate certificate? Private or federal student loans can smooth the path to either goal.

Scholarships and Fellowships

Many business schools automatically consider applicants for merit scholarships based on GMAT/GRE scores, previous educational achievements ,and professional experience. A number of top schools also offer sizable need-based fellowships, which can significantly reduce your out-of-pocket expenses.

MBA scholarships are also available through private organizations and foundations. This type of funding may be awarded based on identity or affinity (such as being a woman or a Native American). Some business schools publish a list of scholarships awarded by external sources, including the amounts and requirements.

Graduate Assistantships or Part-Time Work

Getting a graduate assistant position can also help you pay for business school. These positions typically involve assisting faculty with research or administrative activities and may offer a stipend or hourly wage. Alternatively, you might be able to work as a teaching assistant (TA) or pick up a side gig or part-time job while studying to help you pay for MBA school.

Factors to Consider When Choosing an MBA Program

If you’re trying to decide which MBA program is right for you, here are two key factors to consider:

ROI by Program Type and School Ranking

When comparing business schools, it can be helpful to research the average ROI. This is typically calculated by dividing the average earnings of recent graduates by the average student debt incurred. According to a July 2025 U.S News analysis, these schools offer some of the best ROIs:

Recommended: Student Loan Payment Calculator

Program Format: Full-Time, Part-Time, or Executive MBA

You’ll also need to decide whether you want a full-time, part-time, or Executive MBA program. Here’s a closer look at each option:

•   Full-Time MBA: This can be a good choice for any student looking for full immersion in the student experience. It can also be ideal for early-career professionals looking for a significant career pivot (such as switching from engineering to investment banking or consulting). Full-time enrollment often provides greater access to scholarships, summer internships, and on-campus recruiting opportunities. However, it requires two years of lost income and often comes with high tuition fees.

•   Part-Time MBA: Studying part-time can be a good choice for mid-career professionals who want to move into management or get a promotion within their current field without losing income. Part-time programs offer flexibility scheduling, allow you to keep your salary, and may give you access to tuition assistance. On the downside, it can take three to five years to complete your degree. Plus networking/internship opportunities are typically more limited compared to full-time tracks.

•   Executive MBA (EMBA): An EMBA is specifically designed for mid-to-senior-level working professionals. It offers you a chance to advance your leadership skills without quitting your job, typically through a part-time, flexible format (such as every other weekend). While graduates receive the same Master of Business Administration credential as traditional MBA students, the program’s structure and focus are tailored to working executives. Tuition is often higher than a traditional MBA but is sometimes employer-sponsored.

The Takeaway

The true cost of an MBA degree extends beyond tuition to include fees, living expenses, and the opportunity cost of lost income. While the price tag can be significant, ranging from $78,000 to $270,000 for two years of full-time study including living expenses, the investment often yields a substantial return, with graduates seeing an average salary boost of nearly 70%.

By carefully evaluating the cost of attendance, exploring funding options like scholarships and loans, and considering the program’s potential ROI, prospective students can maximize their investment and make an informed decision about pursuing an MBA.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

How much does it cost to get an MBA?

How much an MBA costs depends on factors like school prestige, program format (e.g., full-time, part-time, or online), and location. The average total cost in the U.S. generally ranges from $78,000 to $270,000, which includes two years of tuition, mandatory fees, and living expenses. You can save money by choosing an online or part-time program from a public university. These avoid expensive living costs and often have lower tuition rates than full-time, on-campus programs, while allowing you to keep working.

Is an MBA worth it?

An MBA can be worth it if it aligns with your career goals, provides valuable skills, and offers strong networking opportunities. It often leads to higher salaries and better job prospects, but the return on investment depends on the program’s reputation and your personal career trajectory.

Is an MBA worth it after 40?

Yes, an MBA can still be a valuable investment after age 40, especially if you are a mid-to-senior-level professional targeting an Executive MBA (EMBA) to advance into leadership roles. An EMBA is specifically designed for working executives and can boost your salary and broaden your network without requiring you to take a career break. The key is to choose a program that aligns with your specific career goals and offers a strong return on investment (ROI) for your current stage in life.

What’s the average student loan debt for MBA graduates?

The average debt for an MBA graduate is $76,996, according to the Education Data Initiative. Roughly 58% of MBA holders have student loan debt.

Do online MBA programs offer the same ROI as in-person programs?

Online MBA programs can offer a comparable, and sometimes even better, return on investment (ROI) compared to in-person programs. While in-person MBAs from top-tier schools often lead to higher immediate post-graduation salaries, online MBAs often provide a faster break-even point by minimizing upfront expenses and allowing students to remain employed while studying.

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SOISL-Q126-006

If you’re in a bind and there aren’t many other options available to you, it is possible to get a personal loan for paying rent. However, you’ll need a solid credit score and credit history to get a good interest rate on a rental assistance loan.

Before you’d get a loan for rent, you may want to evaluate the costs involved and the pros and cons. Read on to learn more about getting a loan for rent payment.

What Types of Loans Can You Use for Rent Payments?

There are several different types of personal loans that you can obtain for paying rent. These include secured and unsecured personal loans for rent assistance, as well as payday loans.

Secured Personal Loans

Secured loans require putting up collateral, which is an item of value used to back up the loan. If the payments on the loan are not made, the lender can seize the collateral and sell it to make up for their losses. Some types of collateral that may be used include cash savings, stocks, a car, a boat, a home, jewelry, fine art, and future paychecks.

Securing a loan with collateral may result in a lower interest rate, but all conditions are dependent on what the lender is willing to take and what terms they’re willing to offer on a personal loan. Given that if you use a secured loan to pay rent and can’t repay it, you could lose your collateral, this may not be the best solution if you are already struggling financially.

Unsecured Personal Loans

Unsecured personal loans do not require collateral. Since the lender has fewer options for recovering the funds should the borrower default, these types of loans often come with higher interest rates and shorter repayment terms.

Payday Loans or Cash Advances

A payday loan, or cash advance loan, is a small, expensive loan you repay all at once, typically on your next payday. Interest rates and fees can be exorbitant. As a result, this type of loan should generally only be a last resort for covering rent payments.

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Reasons Why You May Need to Use Loans for Rent

Using a personal loan for rent isn’t something you’d want to do routinely. Before you signed your lease you undoubtedly gave thought to how much rent you can afford. But you may come across certain scenarios where it may make sense, such as when:

•   You have a short-term financial setback.

•   You’ll soon have the funds to pay the loan back.

•   You have a good to excellent credit score.

•   Your only other option to cover bills is a payday loan.

Keep in mind that while there’s a lot you can use a personal loan for, taking one out still involves assuming debt. If you’re not confident you can repay a rent loan, then it’s worth considering if you have any other options available to cover your rental costs for the month.

What Happens If You Do Not Pay Your Rent?

If you do not pay your rent, your landlord can start eviction proceedings against you. Laws vary from state to state and city to city, but it’s important to pay your rent on time.

If you know you’re going to have trouble paying rent, dig out your lease agreement and find out if you have a grace period, what the late fees are going to be, and who to contact if you need to pay late. If you reach out to your landlord before you miss a due date and explain your situation, they may be willing to give you a grace period and delay eviction proceedings or negotiate your rent in some other way.

Recommended: How Much to Spend on Rent

Is It a Good Idea to Use Personal Loans for Rent Payments?

Generally, experts advise against using a personal loan for paying rent. Ideally, you should have started an emergency fund that can cover these essential costs if something unexpected arises. Once you’re on your feet again, you can budget for future upsets. “If it works with your income, the 50/30/20 budget is one simple method for people starting to organize their finances. This budget allocates 50% of your income for essentials, like rent and bills; 30% to personal day-to-day spending; and 20% for savings or financial goals,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi.

However, if you’ve decided that a personal loan is your best course of action, there are some positive aspects to obtaining loans for rent over other potential options. Of course, there are downsides to take into account as well.

Pros of Using Loans for Rent Payments

Personal loans are known for their flexibility and versatility. Typical personal loan requirements needed for approval make these loans available to a wide variety of people. Here are some of the upsides of turning to a personal loan for paying rent.

Potentially Competitive Loan Terms

A personal loan can come with competitive terms. If you’ve kept your credit in good shape, you may be able to qualify for a low interest rate with low fees and a reasonable repayment term. Your credit score doesn’t have to be perfect to be approved for a personal loan. The minimum required credit score for a personal loan can start at 580. But to get the best terms and rates, you usually need a credit score of at least 640.

Versatility and Accessibility

Personal loans are known for being flexible. Borrowers can use them for a wide variety of purposes. For instance, you can use a personal loan for debt consolidation or to cover home renovations, an upcoming vacation, or even rent, among other things. Plus, personal loans offer quick access to funds — sometimes even the same day you apply.

Could Help You Build Credit

If you make all of your payments on time, having a personal loan could improve your credit profile. Adding an installment loan can also improve your credit mix, which is factored into your score.

Affordability

Interest rates on personal loans are generally lower than interest rates for credit cards. Your landlord may not even be able to take a credit card payment.

Cons of Using Loans for Rent Payments

Using a personal loan to pay rent generally isn’t recommended unless it’s a last resort. There are a number of drawbacks to consider.

Additional Fees

Personal loans aren’t free. You may have to pay an upfront fee to take out the loan, not to mention late fees if you miss a payment or even prepayment penalties if you pay in advance. Look around for lenders that have competitive rates and few or no fees — they are out there.

Possible Harm to Credit Score

If you run into trouble making your loan payments on time, it could have a negative impact on your credit. This could make it harder to qualify for other types of loans, such as auto loans and mortgages, with favorable interest rates in the future.

Interest Rates

If you’re having trouble making your rent payment, other areas of your financial life may have taken a hit. This could mean the interest rate you’re given for a personal loan will be less than ideal. Even if you’ve been able to maintain great credit, you’ll still need to pay interest on a loan for rent.

Increased Debt

Personal loans add debt to your bottom line. You’ll pay more over time by financing your rent payment into a loan. If you’re experiencing financial woes, adding a loan payment on top of what you’re going through may not be a good option.

The Takeaway

It’s possible to obtain a personal loan for a wide range of purposes, including paying rent. However, it’s important to weigh the pros and cons of getting a loan for rent before you do so. You’ll owe interest (and possible fees), and you could do harm to your credit if you’re not timely about repayment. But if it’s your last resort, a loan for rent is an available option.

If you do decide to get a personal loan — whether for covering rent or another purpose — it’s important to shop around to find the best possible offer for you.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Are you able to use loans for rent payments?

Yes, you can use rent loans for payments. You may want to examine all your options before you do, though. Personal loans carry fees and interest, and if you miss payments, you can drag down your credit score.

Is it hard to get a loan for rent payments?

It can be hard to get a loan if you have poor or thin credit or a low income. A lender will analyze your credit score, credit history, and income to determine what amount you can afford to borrow and on what terms.

What type of loan is good for rent payments?

Personal loans are a flexible means to pay for a number of things, including rent. Payday loans and credit card cash advances are high-cost ways to make rent payments, and generally should be avoided.

What are the risks of using a personal loan to pay rent?

If you use a personal loan to pay rent and are not able to repay what you have borrowed and still keep up with future rent payments, you could find yourself in a financial hole that is difficult to dig your way out of. Defaulting on your personal loan payments will have a negative impact on your credit score, which is one thing a landlord might be looking at before agreeing to rent to you in the future.

Are there alternatives to using a loan if I cannot afford my rent?

If you cannot pay your rent and have attempted to negotiate a reduction or other rent relief with your landlord, other options besides a loan might be available depending on where you live. Call 211, a national nonprofit line for those struggling with rent and utility bills. The organization also maintains information about eviction regulations in local markets. Of course, defraying your costs by finding someone to share your home or breaking your lease and changing your living arrangement are also options.

Photo credit: iStock/nortonrsx

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SOPL-Q126-003

If you have high-interest credit card debt and are ready to put together a plan to pay it back, you might be considering one of two popular methods: credit card refinancing vs. debt consolidation.

Both involve paying off your debt with another credit card or loan, ideally at a lower interest rate. Still, the two methods are not the same, and both options require careful consideration. Below, we’ll discuss the pros and cons of each debt payback method, so you can make an informed decision.

What Is Credit Card Refinancing and How Does it Work?

Credit card refinancing is the process of moving your credit card balance(s) from one card or lender to another with a lower interest rate. The main purpose of refinancing is to reduce the amount of interest you’re paying with a lower rate while you pay off the balance.

Common Ways to Refinance Credit Card Debt

A common way to accomplish a credit card refinance is to pay off your existing credit cards with a brand-new balance-transfer credit card. This type of card offers a low or 0% interest rate for a promotional period that may last from a few months to 18 months or more. Can you refinance a credit card that you already have? Perhaps. You can always try to approach your existing credit card issuer and ask for a lower interest rate, possibly by doing a balance transfer to a lower-rate card issued by the same company.

What are the Benefits of Credit Card Refinancing?

We’ve discussed what is credit card refinancing and its goal: to lower your interest rate. Now let’s explore some of the benefits (and drawbacks) of refinancing.

Pros

•   You may qualify for a promotional 0% annual percentage rate (APR) during your card’s introductory period. If you can pay down your debt during this time, you could potentially get out of debt faster.

•   Depending on the interest rate you’re offered, you could save money in interest charges.

•   Bill paying would be streamlined if you decide to refinance multiple credit cards into one new credit card.

•   If monthly payments are reasonable, it may be easier to consistently pay them on time. This can help build your credit score.

Cons

•   The introductory 0% interest period is short-term, and after it ends, the interest rate can skyrocket to as high as 25%.

•   There may be a balance transfer fee of 3%-5%, which can add to your debt.

•   0% interest balance transfer cards often require a good or excellent credit score to qualify.

•   Your credit score may temporarily dip a few points when you apply for a new credit card or loan. That’s because the lender will likely run a hard credit check.

Recommended: What Is the 10% Credit Card Interest Rate Cap Act?

Who Should Consider Credit Card Refinancing?

Credit card refinancing isn’t right for everyone. That said, a balance transfer to a 0% APR card could be a good move if you have a smaller debt to manage or are carrying a balance on more than one credit card. Plus, transferring multiple balances into one card can streamline bills. All of the usual credit card rules apply when you transfer a balance, so you’ll want to make every payment on time with your new card.

Refinancing may make sense if you’re looking for better terms on your credit card debt, qualify for a 0% APR, and can pay off the balance before the promotional period ends.
So, as you’re weighing your options, you’ll want to consider a number of factors, including:

•   Your credit score and credit history

•   How much debt you have

•   Your personal finances and whether or not you can eliminate the debt fairly quickly

Recommended: The Risks of Payday Loans

What Is Credit Card Debt Consolidation?

Credit card debt consolidation is an alternative to credit card refinancing. The term “debt consolidation” refers to the process of paying off multiple credit cards or other types of debt (such as medical debt) with a single loan, referred to as a debt consolidation loan. The main purpose of consolidation is to simplify bills by combining multiple payments into one fixed loan payment, while ideally also saving on interest.

Types of Debt Consolidation

There are two primary types of debt consolidation loans: a personal loan and a loan secured by your home equity. The latter could be either a home equity loan or a home equity line of credit (HELOC). Not everyone owns a home or has enough equity to qualify for home equity lending, so let’s focus on what a personal loan is and how you might use it to consolidate debt.

A personal loan (sometimes referred to as a debt consolidation loan) will often have a lower interest rate than most credit cards (with the exception of the 0% APR period on a credit card, of course). However in order to qualify for a lower rate on a personal loan, you’ll need to have a strong credit score, which will largely determine your personal loan interest rate. Depending on your financial profile, you might be able to borrow anywhere from $5,000 to $100,000.

There are pros and cons to paying off multiple credit cards with a single short-term loan. Let’s take a look:

Pros

•   Personal loans often have lower interest rates than credit cards and can save you money on monthly payments as well as on interest charges over the life of your debt repayment.

•   You can pay off multiple debts with one loan, which can take the hassle out of bill paying.

•   The structured nature of a personal loan means you can make equal payments toward the debt at a fixed rate until it is eliminated.

•   With most personal loans, you can opt for a fixed interest rate, which ensures payments won’t change over time. (Variable interest rate loans are available, but their lower initial rate can go up as market rates rise.)

Cons

•   The terms of a loan will almost always be based on your credit history and holistic financial picture (another reminder to keep an eye on personal finance basics like making timely payments). Not every borrower will qualify for a low interest rate or get approved for a personal loan at all.

•   Some lenders may charge fees, including personal loan origination fees.

💡 Quick Tip: Wherever you stand on the proposed Trump credit card interest cap, one of the best strategies to pay down high-interest credit card debt is to secure a lower interest rate. A SoFi personal loan for credit card debt can provide a cheaper, faster, and predictable way to pay off debt.

Credit Card Refinancing vs. Debt Consolidation

To recap, the difference between debt consolidation and a credit card refinance is first a matter of goals.

With credit card refinancing — as with other forms of debt refinancing — the aim is to save money by lowering your interest rate. Debt consolidation may or may not save you money on interest, but will certainly simplify bills by replacing multiple credit card obligations with a single monthly payment and a structured payback schedule. This structure and simplification can be just what it takes to help some borrowers who are struggling with credit to get their debt paid off.

The other difference is that credit card refinancing typically utilizes a balance transfer credit card that has a 0% or low interest rate for a short time. This limits the amount you can transfer to what you can comfortably pay off in a year or so. Debt consolidation utilizes a personal loan, which allows for higher balances to be paid off over a longer payback period.

Which strategy is right for you? That depends on a number of factors, including the amount of debt you have, your current interest rates, and whether you’re able to stick to a structured repayment schedule. Of course, it’s important to regulate your use of credit cards in either scenario. The last thing you want is to be paying off a personal loan or facing the expiration of a 0% interest rate when you’ve racked up more credit card debt.

The chart below sums up the credit card refinancing vs. debt consolidation story.

Side-by-Side Comparison of Key Features

The Takeaway

Credit card refinancing is when a borrower pays off their credit card(s) by moving the balance to another card with a lower interest rate. A popular way to do this is with 0% interest balance transfer credit cards. However, borrowers typically need a high credit score to qualify for the best rates on these cards. Debt consolidation, on the other hand, is when a borrower simplifies multiple debts by paying them off with a personal loan. Personal loans with a fixed low interest rate and a structured payback schedule are a smart option for consolidating debts.

If you have a relatively small balance that can be paid off in a year or so, refinancing with a balance transfer credit card may be right for you. If you have a larger balance or need more time to fully pay it off, personal loans are available.

Credit cards have an average APR of 20%–25%, and your balance can sit for years with almost no principal reduction. Personal loan interest rates average 12%, with a guaranteed payoff date in 2 to 7 years. If you’re carrying a balance of $5,000 or more on a high-interest credit card, consider a SoFi Personal Loan instead. See your rate in minutes.

FAQ

Which is better: credit card refinancing or debt consolidation?

There are advantages and drawbacks to both strategies. Credit card refinancing can help you lower your interest rate, which can save you money. Debt consolidation might save you money on interest, but it will definitely simplify bill paying by replacing multiple cards with one monthly bill.

Is refinancing a credit card worth it?

Refinancing a credit card may be worth the effort because it can lower your interest rate, potentially save you money, and make payments more manageable.

Is refinancing the same as consolidation?

Though refinancing and consolidation can both help you manage your debt, they serve different purposes. Refinancing involves moving credit card debt from one card or lender to another, ideally with a lower interest rate. Paying less in interest while you pay off your debt is the main goal of refinancing. When you consolidate, you settle multiple debts with one loan. Simplifying bills into one fixed loan payment is the main reason to consider this strategy.

How do credit card refinancing and consolidation affect my credit score?

Credit card refinancing and debt consolidation might temporarily reduce your credit score because your lender will likely do a hard credit check to qualify you for the account. But with time and consistent, on-time payments, your credit score should rebound. Consolidating several credit cards into one personal loan might also help improve your credit utilization ratio, which in turn should nudge your score upward. Opening new credit accounts, however, can reduce the overall age of your credit accounts, as can closing old accounts. Both of these can ding your credit score. If you aren’t applying for other forms of financing, such as a mortgage, none of this should be a huge concern so long as you are using the credit card refinance or consolidation to reduce debt and better manage your finances.

What should I consider before refinancing or consolidating?

The most important thing to consider when thinking about credit card refinancing or debt consolidation is whether you will save money when interest and fees are factored in. It’s also important to have a good look at your credit habits. If you think having a new credit card with 0% introductory financing might result in you charging even more and falling more deeply into debt, you might want to consider a personal loan and/or explore credit counseling, in which you will work with a professional to help change unhealthy habits and develop a strategy to reduce debt.

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If you don’t pay your credit card bill, you could face more severe consequences than you might think. Though it will depend on your credit card issuer, you can generally expect to be charged a late fee as well as a penalty interest rate which is higher than the regular purchase annual percentage rate, or APR.

Life happens, and, from time to time, payments are missed, especially if you’re dealing with emergencies such as losing a job or a family crisis. In the event you have skipped a credit card payment, it’s crucial you understand what consequences you may face. That way, you can take steps to reduce the odds of it having a major impact on your financial health.

What Happens If You Don’t Pay Your Credit Card?

Consequences for missed credit card payments could include being changed late fees and possibly losing your grace period. It may also negatively affect your credit score since issuers report your payment activity to the credit bureaus — in most cases after 30 days.

There may be other consequences depending on how late your payment is and whether it’s your first time missing a payment.

Accruing Interest

When you don’t pay your credit card, interest will accrue and will continue to do so as long as you have a balance on your card. In essence, you are paying more for your initial purchase thanks to that interest.

The longer you go without paying your credit card, the more you risk your rate going up. Your credit card issuer may start imposing a penalty annual percentage rate (APR), which tends to be higher than your regular purchase APR. If this happens, you’ll end up paying more in interest charges. The penalty APR may apply to all subsequent transactions until a certain period of time, such as for six billing cycles.

Collections

Depending on your credit card issuer, your missed payments may go into collections if it goes unpaid for a period of time. You’ll still continue to receive notices about missed payments until this point.

More specifically, if you don’t pay your credit card after 120 to 180 days, the issuer may charge off your account. This means that your credit card issuer wrote off your account as a loss, and the debt is transferred over to a collection agency or a debt buyer who will try to collect the debt.

Once this happens, you now owe the third-party debt buyer or collections agency. Your credit card issuer will also report your account status to the major credit bureaus — Experian®, TransUnion®, and Equifax®. This negative information could stay on your credit report for up to seven years.

It’s hard to tell what third-party debt collectors will do to try and collect your debt. Yes, they may send letters, call, and otherwise attempt to obtain the money due.

Some collections agencies may even try to file a lawsuit after the statute of limitations expires. In rare cases, a court may award a judgment against you. This means the collections agency may have the right to garnish your wages or even place a lien against your house.

If your credit card bill ends up going to collections, take the time to understand what your rights are and seek help resolving the situation. Low- or no-cost debt counseling is available through organizations like the National Foundation for Credit Counseling (NFCC).

Bankruptcy

You may find that you have to declare bankruptcy if you still aren’t able to pay your high credit card debt and other financial obligations. This kind of major decision shouldn’t be taken lightly. You will most likely need to see legal counsel to determine whether you’re eligible.

If you do file for bankruptcy, an automatic stay can come into effect, which protects you from collection agencies trying to get what you owe them. If you successfully declare bankruptcy, then your credit card debt will most likely be discharged, though there may be exceptions. Seek legal counsel to see what your rights and financial obligations are once you’ve filed for bankruptcy.

Recommended: Understanding Purchase Interest Charges on Credit Cards

Making Minimum Payments

A minimum payment is typically found in your credit card statement and outlines the smallest payment you need to make by the due date. Making the minimum payment ensures you are making on-time payments even if you don’t pay off your credit card balance. Any balance you do carry over to the next billing cycle will be charged interest. You can also avoid late fees and any other related charges by making a minimum payment vs. not paying at all.

If you find you’re regularly struggling to make the minimum payment, or preferably, more than the minimum payment, it may be time to consider finding a lower interest rate. Carrying a balance longer-term on a high interest credit card can cause your debt to spiral.

💡 Quick Tip: Credit card interest rate caps have recently been proposed in response to rising interest rates. However, one option already available to borrowers is securing a fixed, lower-interest rate loan. A SoFi credit card consolidation loan may offer a lower interest rate, set terms, and a transparent pay-off plan.

What Happens if You Miss a Payment

If you can’t pay your credit card for whatever reason, it’s best to contact your issuer right away to minimize the impact. Let them know why you can’t make your payment, such as if you experienced a job loss or simply forgot. For the latter, pay at least the minimum amount owed as soon as you can (ideally before the penalty or higher APR kicks in).

If this is your first time missing a payment but you have otherwise paid on time, you can try talking to the credit card company to see if they can waive the late fee.

Some credit card issuers may offer financial hardship programs to those who qualify, such as waiving interest rates, extending the due date, or putting a pause on payments (though interest may still accrue) until you’re back on your feet.

Recommended: Breaking Down the Different Types of Credit Cards

15/3 Rule for Paying Off Credit Cards

The 15/3 payment method can help you keep on top of payments and lower your credit utilization — the percentage of the credit limit you’re using on revolving credit accounts — which can impact your score.

Instead of making one payment when you receive our monthly statement, you pay twice — once 15 days before the payment due date, and the other three days beforehand. This plan is useful if you want to help build your credit history and pay on time.

The Takeaway

Missing your credit card payment may not be a massive deal if it just happens once or twice, but it can turn into one if you continue to ignore your bill. Late fees, a higher penalty APR or, worse still, having your account go to collections could result. That’s why if you are having trouble paying your bill (or simply forget to), you should contact your credit card issuer ASAP.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

How long can a credit card go unpaid?

The statute of limitations, or how long a creditor can try to collect the debt owed, varies from state to state, which can be decades or more.

What happens if you never pay your credit card bill?

If you never pay your credit card bill, the unpaid portion will eventually go into collections. You could also be sued for the debt. If the judge sides with the creditor, they can collect the debt by garnishing your wages or putting a lien on your property.

Is it true that after 7 years your credit is clear?

After seven years, most negative remarks on your credit report, such as accounts going to collections, are generally removed.

Photo credit: iStock/MStudioImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

This article is not intended to be legal advice. Please consult an attorney for advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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A balance transfer can affect your credit score either positively or negatively — though the upsides are likely to outweigh any adverse effects in the long-term if you manage the balance transfer responsibly. Typically, applying for a new line of credit triggers a hard credit inquiry, which temporarily lowers your credit score by five points or so.

However, the period of low or no interest that these cards offer can allow the cardholder to catch up on payments, lowering their credit utilization and possibly building their credit score. Read on to learn more about how a balance transfer can impact your credit score.

How Does a Balance Transfer Work?

A balance transfer is the process of consolidating existing high-interest debt to a different credit card. In other words, you’re effectively paying a credit card with another. Usually, you transfer the balance to a new credit card, but some cards allow you to do a balance transfer to an existing card.

Balance transfer credit cards often offer a low, or even 0%, annual percentage rate (APR) for a promotional period. This temporarily lowers the credit card interest rate, potentially allowing you to save on interest and more quickly pay off your debt. The length of the introductory APR offer varies by card, usually lasting anywhere from six to 21 months, after which the standard purchase APR will apply.

There is usually a fee required to make a balance transfer. This fee is either a flat rate or a percentage of the balance you’re transferring, such as 3% to 5% of your balance.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

When to Transfer the Balance on Your Credit Card

There are two key things to look for in order to identify an opportune time for a balance transfer. First, you’re approved for a balance transfer card that offers a 0% APR introductory period. Second, you’re in a place where you can focus on paying off the balance you transfer to your new card before the promotional period ends.

It’s important to work aggressively on eliminating your balance during this period. Otherwise, once the promotional APR kicks over to the usual APR, the interest rate could potentially be as high — if not higher — than the APR of your old card.

If it may not be possible to pay off the balance within the introductory period, it’s worth looking into other options to avoid potentially getting yourself even deeper into debt. The average credit card interest rate was close to 22.00% in late 2025, according to data from the Federal Reserve, compared to late 2015, when it was less than 14%. In fact, high interest rates have recently elicited calls to temporarily cap credit card interest rates at 10%.

While there are vastly different viewpoints on credit card rate caps, there are other options to consider. Though less flexible than a credit card, a non-revolving credit line, such as a personal loan, typically offers lower interest rates, as well as predictable, fixed payments and a clear end date. It’s important to think about options that might be best for your current financial situation.

💡 Quick Tip: There is a lot of debate around credit card interest caps, currently. For those carrying high-interest credit card debt, however, one of the shortest paths to debt relief is switching to a lower-interest personal loan. With a SoFi credit card consolidation loan, every payment brings you closer to financial freedom.

How a Balance Transfer May Hurt Your Credit Score

While a balance transfer itself won’t directly impact your credit score, opening a new balance transfer card could have a ripple effect on your credit. A balance transfer to an existing credit card may not affect your credit score as much as opening a new account.
Here are a couple of the ways a balance transfer could cause your credit score to drop:

•   Applying for new credit results in a hard inquiry. Whenever you apply for a credit card, the credit card issuer will do a hard pull of your credit, which usually lowers your score by a few points. Hard inquiries stay on your credit report for two years. That being said, when compared to what affects your credit score on the whole, hard inquiries don’t impact your credit as much as, say, your payment history or credit utilization.

•   Getting a new card will lower the average age of your credit. Another way that opening a new balance transfer credit could hurt your credit score is by lowering the average age of your credit. The length of your credit history makes up 15% of your score. A longer credit history is an indicator that you’ve taken steps toward establishing credit.

Recommended: When Are Credit Card Payments Due?

How a Balance Transfer May Impact Your Credit Score

Now, let’s take a look at how a balance transfer can impact your credit score:

•   It can lower your credit utilization rate. As credit usage makes up a significant chunk of your credit score — 30%, to be exact — a balance transfer could give your credit score a lift. When you open a new credit card account, it will add to your total credit limit, which, in turn, can lower your credit utilization. As a credit card rule, the lower your credit utilization, the better it can be for your credit score.

   Here’s an example: Say you have two credit cards, and they each have a $10,000 credit limit, for a total credit limit of $20,000. You’re carrying a $10,000 balance. In turn, your credit usage is 50%.

   Now, let’s say you open a new balance transfer credit card that has a credit limit of $10,000. Combined with your other two cards, you’ll now have a total credit limit of $30,000. With a $10,000 balance, your total credit usage is lowered to about 33%.

•   You may be able to pay down debt faster. As you’re paying less interest — or perhaps no interest at all — during your card’s promotional period, you can more easily whittle away at your outstanding debt quicker. That’s because more of your payments will go toward paying down your principal. Plus, lowering that outstanding balance also feeds into lowering your credit utilization ratio — another positive when it comes to building credit.

•   A balance transfer can make it easier to stay on top of payments. A balance transfer may allow you to consolidate multiple balances into one monthly payment. This can make it easier to stay on top of making on-time payments, as you won’t have numerous due dates to juggle. In turn, this can have a positive impact on your payment history, which makes up 35% of your credit score.

Recommended: What is the Average Credit Card Limit?

Steps to Take After a Balance Transfer

So you’ve decided to do a balance transfer. Congrats! Now, here are the steps to take to make the most of it.

Stop Using Your Other Credit Cards

If possible, put a halt on spending with your other credit cards. That way, you can focus solely on paying off the outstanding balance you’ve transferred.

Still, you’ll want to keep your other cards open. You might consider using a credit card to make a small purchase every so often to keep those accounts active.

Know When the Introductory Period Ends

Make sure you’re aware of when the introductory APR for your balance transfer card ends. Also take time to note what the balance transfer card’s standard APR is. When the promotional APR ends, that rate is what your new APR will be.

Devise a Payoff Plan

A balance transfer is really only worthwhile if you aim to pay off your outstanding debt — or as much of it as possible — during the promotional APR period.

Let’s say you have $6,000 in debt, and you’ve secured a 0% APR that will last for 12 months. Aim to pay off $500 every month, or $250 twice a month. That way, you’ll have your debt paid off before the higher APR kicks in.

Make Shifts in your Spending

To ensure that you’re paying off the outstanding amount on your balance transfer card at a steady clip, look at ways you can scale back on your spending. Doing so will free up money that you could throw at your debt payoff efforts instead.

Along the same lines, see if you can increase your cash flow. Perhaps you can take on more hours at work or get a side hustle.

Is a Balance Transfer a Good Idea?

A balance transfer can be a solid move to make if you’re prepared to knock off the debt before the introductory APR period ends. Otherwise, you’re left with a mountain of debt — potentially with a higher interest rate than you currently have.

When deciding whether a balance transfer is right for you, you’ll also want to take into account any balance transfer fees you’ll pay. Do the math to ensure the amount you’ll save on interest will more than offset the cost of these fees.

Also note that, before you worry about balance transfer effects on your credit score, you’ll need to consider whether your credit is even strong enough for you to qualify. The most competitive balance transfer offers generally require at least good credit (meaning a FICO® score of 670 or above), further underscoring the importance of good credit.

If you’re not sure of where you stand credit-wise, don’t worry about taking a peek: here’s how checking your credit score affects your rating (spoiler: it doesn’t).

The Takeaway

A balance transfer can both hurt and help your credit score. Your credit score could temporarily suffer slightly after applying for a new balance transfer card and triggering a hard credit inquiry. However, a balance transfer has the potential to help build your credit score, as it can lower your credit utilization rate and make it easier for you to stay on top of your payments.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Do balance transfers hurt your credit score?

Balance transfers can both hurt or help your credit score. Making a balance transfer can hurt your credit score if you apply for a new card to do so, which requires a hard pull of your credit. It can also ding your score because it may lower the average age of your credit lines.

Will I need a credit credit score for a balance transfer?

To qualify for a balance transfer card with a zero or low interest rate, you’ll need a strong credit score. A good credit score to qualify is generally considered in the range of 670+.

Will I lose points with a balance transfer?

You will not lose rewards points with a balance transfer. That’s because your old creditor will generally consider the balance transfer as payment.

What are the negatives of a balance transfer?

Getting a balance transfer credit card can temporarily bring down your credit score by five points or so if it requires a hard inquiry on your credit report. Plus, it can lower your average credit age. Another downside of a balance transfer is that you’ll need to pay a balance transfer fee, which is either a flat rate or a percentage of the outstanding amount.

Photo credit: iStock/Roman Novitskii

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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