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I note that friends that have been participating in the re-fi trend have mostly taken cash out to consolidate their credit, only to be rebuilding their credit card balances again.

When I refinanced my mortgage, I had to tell the loan officer several times that I was not taking cash out, and furthermore I wanted to pay cash for the closing costs instead of folding closing costs into the new mortgage. My impression was that most of his clients were taking equity out or at least folding closing costs into the refi.

A few years ago I did some google searching and came across a report on the FDIC site about high LTV loans--a company surveyed a number of borrowers and within 1 year 70% of them were back in credit card debt.

In fact, it is so common for people to drive back up the balances on their credit cards that the industry even has a term for that: reload.

Informal observations in the Consumer Credit / Credit Card board confirms the 70% ratio with some insight: people who made use of home equity loans, 401(k) loans, or borrowed from parents to pay off the cards, but didn't have a definite debt elimination plan, usually ended back in credit card debt (they "reloaded" their credit cards), with the result being worse than if they hadn't taken out a loan to refinance their credit card debt. On the other hand, those who had a definite debt elimination plan and were sticking with it and used such a loan were usually successful in staying out of credit card debt.
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