Is it a Good Idea to Pay off Credit Cards with a Home Equity Loan?
Don’t Transfer Your Credit Cards to a Home Equity Loan
More and more consumers are transferring the balances of their credit cards to a home equity loan. While it’s true that home equity loan rates may be lower than many credit card rates, that doesn’t necessarily mean that transferring your credit cards to a home equity loan is a good idea. Here are the reasons why.
Secured Debt vs. Unsecured Debt
First thing you need to do is ask yourself, do you really want your home securing your credit card debt? While credit cards are unsecured debts, a home equity loan is secured by the equity in your home. If you can’t make your payments for some reason, you may end up losing your home.
The Interest Factor
While home equity loans were very, very low in interest for quite some time, that’s no longer the case. Many credit card companies are offering interest rates that are much lower than the going home equity loan rate. Because of this, you might want to consider a low-interest credit card before you think about tapping into the equity in your home to pay off your credit cards.
Visit this website to apply for a low APR interest credit card.
Comments
Thank you for the article on transferring credit card debts to home equity loans! I am an accountant and hear never-ending stories from people who think this is a good idea. Bottom line: if you cannot afford to pay your credit card debt, don't charge!!
Posted by: MARY GESAMAN | March 22, 2006 11:49 AM