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Any time the Federal Reserve lowers interest rates, consumers become excited. They refinance their mortgages for lower rates, they buy a new home, and they change their financial habit to adjust to the new changes. It’s not a bad thing to refinance so long as it’s for the same timeframe or less to take advantage of a lower rate. Refinancing a home you’ve been paying your mortgage on for a decade for another 30 years just to take advantage of the lower rates and a significantly lower payment isn’t always cost-effective. Other consumers take advantage of low interest rates to refinance their mortgage to roll their credit card debt into the mortgage. It’s still a lower payment, and now they have no debt. It’s something many consumers feel is a great concept, but it’s not. There are several reasons rolling your debt into your refinance makes no financial sense.

You’re Not Changing Habits

For most consumers, debt is a habit. Very few are in debt because of an emergency or other horrible situation. Most are in debt because they spent too much time shopping for things they could not afford. It’s a bad habit, and rolling credit card debt into your refinance only makes that situation worse for many consumers. When the easy way to get rid of debt is simply to refinance, you’re learning nothing. You’re learning there are easy ways to handle debt, so you continue to purchase items you can’t afford and assume you’ll be able to roll it into another refinance in a few years. Additionally, these consumers feel they are debt-free. They’re not debt-free when their credit cards are now part of their mortgage.

You Pay Credit Cards Longer

Even if you see the overwhelming amount of money you pay to your credit card over the years making only the minimum payment, it’s still lower than the amount you’ll pay for your credit cards when they’re part of your new mortgage. It’s cheaper and faster to pay off debt one minimum payment at a time than it is to roll it into your mortgage for most consumers.

Here’s a situation that might help you see how you’re now paying your credit card debt. Let’s say you roll your credit card debt into a new mortgage for 30 years. You just used that card the night before to order a $20 pizza delivery for your family knowing the amount on that card would go into the mortgage and that pizza would basically be free since it’s eliminated the next day. First, your pizza debt is not eliminated. Your pizza debt is now part of your mortgage. That $20 pizza is now something you’ll spend the next 30 years paying off.

Think about that. Your pizza is now a 30-year debt. Does that make sense? It doesn’t, and that’s what many consumers fail to realize when they refinance. Every pair of shoes, ever tank of gas, every trip to the store or flight for vacation they roll into their mortgage is now being paid for over the course of three decades. Suddenly those things seem a lot less worthwhile.

Retirement

Consider your retirement. No one wants debt in retirement, and that includes a mortgage. Financial experts believe you should have zero debt when you retire, which means you’re doing yourself no favors when you spend money on refinancing right now. Do you want to retire with a larger mortgage on a home that should have been paid off years ago? And will you ever recoup the money you spent on that house as you refinanced it for more than it was worth? It’s akin to paying for your house twice and still only selling it once.

Think twice before you roll your credit card debt into a mortgage refinance. Yes, the rates are as low as they’ve been in a long time. You can still take advantage of that by refinancing your home for the same term just at a lower rate, but don’t add your credit card debts to the mix. It’s a bad habit, and it’s a very expensive decision over the long-run.