Should I use a HELOC to pay off credit card debt?
A HELOC (home equity line of credit) can be a useful tool for paying off credit card debt, as it often has a lower interest rate and a long repayment period.
Using a HELOC to pay off debt comes with risks, such as the potential to accrue more debt or even lose your home if you can't make payments.
You should explore other avenues like home equity loans, cash-out refis and personal loans — and their associated interest rates — before choosing a HELOC.
You have a lot of credit card debt, and you'd love to pay it off all at once. A home equity line of credit (HELOC) could be the answer.
It's basically borrowing money from a new source to settle the sums you owe the old source — exchanging one debt for another. But this new debt can be easier to deal with.
Not that it doesn't carry its own concerns. Here's what you need to know about using a HELOC for paying off your credit cards: the pros and the cons.
The strategy is simple: You apply for a HELOC — a line of credit based on your home equity, the percentage of your home you own outright (not mortgaged). Once the credit line is established, you draw against it, and use these funds to pay off your credit card balances.
Keep in mind: Tip: Some HELOCs come with their own checks or debit cards. Or, you can simply transfer the funds to a bank account and pay off the plastic from there, via a check or online at the card issuer's website.
You'll have to repay the money you borrowed from your HELOC, of course, but you'll generally have a long period in which to make the payments: a decade or two. And your HELOC will likely have a much lower interest rate than your credit cards or a personal loan.
There are several benefits to using a home equity line of credit to pay off credit cards. Nearly one-third (30 percent) of homeowners cite debt consolidation as a good reason to tap their home equity, according to Bankrate's Home Equity Insights Survey. It was the second most popular rationale, in fact.
Instead of paying off credit card debt bit by bit (with either the snowball method or the avalanche method, for example), a HELOC lets you eliminate it immediately or within a few months. If you are currently feeling overwhelmed by the outstanding balances, using a HELOC can provide significant mental relief.
The average credit card interest rate is more than 20 percent. In contrast, the average HELOC interest rate is hovering just above 8 percent as of mid-June 2025. Keep in mind that these are variable interest rates, which means they can go up or down depending on the prime rate. Even if your HELOC interest rate rises, though, it's still likely to be much lower than your credit card's APR (which will also fluctuate with the prime rate, remember).
By paying off those high-interest balances, you'll have a lot more discretionary income, of course. Your FICO credit score should also increase with the absence of debt on your record. Because a HELOC is secured by your home, its balance doesn't count in computing your credit utilization ratio, one of the factors determining your score. (The HELOC itself will appear on your credit report, though.)
Using a HELOC to consolidate debt isn't without its risks.
HELOC debt is secured debt, which means that if you don't pay it off in full, the lender has the right to claim whatever you put down as collateral. With a HELOC, that's your home. When you take out a HELOC, you run the risk of foreclosure if you miss payments or can't pay back the principal within the designated time period. Credit card debt, by contrast, is unsecured — meaning, the card issuer can make scary noises, but can't seize anything of yours in payment.)
Nobody pays off their credit cards with the intention of immediately digging a new debt hole. But if you don't practice healthy financial habits, you could find yourself right back where you started, sooner rather than later.
If you use a HELOC to pay off your credit cards and then start building up unpaid balances again, you'll have both the credit card debt and the HELOC debt to pay back. Plus, during the HELOC's draw period, you might be tempted to use any leftover credit, accruing even more debt. It can be easy to lose track of how much you're spending, too.
Many HELOCs allow you to repay just interest during their draw periods. If you surrender to that temptation, your monthly payments will abruptly zoom when you enter the repayment period, because they'll now include both principal and interest. And if interest rates have risen as well, you might find your monthly obligation double or triple its previous amount — which can be a big blow to the budget if you didn't prepare for the increase.
Both HELOCs and home equity loans (HELoans) can be effective ways to pay off debt. In the case of credit card debt, though, the HELoan may have a slight edge.
Presumably, you know (or can calculate) the exact outstanding amount on your cards. And presumably, you'd want to clear it as soon as possible because those high APRs multiply balances at a rapid clip. This situation is well-suited for a home equity loan, which disburses a single lump sum that gets repaid in fixed-rate monthly installments. In contrast, with their fluctuating interest rates and long draw periods, HELOCs work well when you're not sure of the exact sum you'll need, or for expenses that get incurred over a long period (like college tuition or a contractor's bill on a long-term construction project).
Home equity loans' interest rates are comparable to HELOCs. (As of this writing, they are averaging 8.45 percent.) Of course, you are locked into paying that rate for the loan's lifetime.
While you can use either in most situations, HELOCs are more advantageous for some expenses, while home equity loans work better for others.
Expense
Preferable tool
Why it makes sense
Emergency
HELoan
This is probably a fixed sum that would be better to repay ASAP
Business start-up
HELOC
Expenses are indefinite and will run over an extended period
Credit card balances
HELoan
You can add up exactly how much you'll need to pay off all your plastic, which you'd presumably do all at once
College tuition
HELOC
You can withdraw funds as needed just to pay for a semester, quarter or half-year
Months-long, multi-faceted home renovation project
HELOC
Periodic draws ideal for paying contractor in installments; you have reserves if project has cost overruns
Medical bill
HELoan
Better to pay this bill in total, sooner rather than later
HELOCs aren't the only debt-settling tool in town. Most of these alternatives mean you won't have to put your home up as collateral, but they do have drawbacks.
Debt consolidation loan: Roll all your credit bills together and pay them with a single debt consolidation loan, one with a lower interest rate. A reputable debt counseling service can help you do this, in addition to providing guidance on how to manage your finances and pay off your balances over time. This move can have negative consequences for your credit score, though.
Personal loan: Unsecured personal loans can be easier and quicker to obtain than home equity products. On the downside, their interest rates are higher, even if you have a strong credit score (720 or above). Also, their terms are usually shorter.
Balance transfer credit card: Moving outstanding debt from one credit card to a new one can help you take advantage of low promotional interest rates: You might even find a card with a 0 percent APR. Just make sure you'll be able to pay off the balance before that introductory rate period expires, usually within a year or two.
Cash-out refinance: With a cash-out refinance, you're tapping your home equity, swapping out your old mortgage for a new, larger one and taking the difference in cash. Cash-out refis carry lower interest rates than HELOCs – but there's also the hassle of having to apply and go through underwriting all over again, plus paying closing costs.
Learn more: Home Equity Loan Or HELOC Vs. Cash-Out Refinance
While a HELOC can be a smart way to tackle credit card debt, it's not the best move for everyone.
Using a HELOC to settle credit card balances can make good fiscal sense if you own a substantial stake in your home outright — giving you a lot of money to borrow — and the interest rates on your outstanding card debt are in the high double digits.
That said, this strategy comes with its risks, including the risk of losing your home. Also, bear in mind that HELOCs can be tough to get: They demand at least a 'very good' credit score — which, if you've got a mountain of debt, you may not have.
If you've got a good amount of home equity to tap, and can score a low interest rate, it could be the best choice. But be sure to compare the APRs and understand the repayment terms and fees. You don't want to get blindsided — not when it's your home on the line.
Can I use a HELOC for other expenses besides credit card debt?
Yes, lenders typically don't have any restrictions on what you can use HELOCs for. Homeowners use HELOCs for a variety of expenses, including home renovations, education expenses and to start or grow a business.
Do I have to pay off my credit card debt all at once with a HELOC?
No, you don't have to pay off of your credit card debt all at once with a HELOC. It's a revolving line of credit: You can choose how much of it to use and when and to use it (in line with any rules the lender has about withdrawals, of course). But the sooner you settle those high-APR credit card balances, with their ever-multiplying amounts, the better.
How can I avoid the temptation to re-borrow after using a HELOC to pay credit cards?
Treat your HELOC like a loan rather than a line of credit and set up a structured plan to pay it back, even before the repayment period begins. Reduce your reliance on credit by creating a realistic budget. Limit yourself to using just one or two credit cards (to better keep track of your spending) and shifting to using cash or debit cards for everyday expenses.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
30 minutes ago
- Yahoo
Latest Trade Proposal from Media Sends Micah Parsons To NFC Rival
Latest Trade Proposal from Media Sends Micah Parsons To NFC Rival originally appeared on Athlon Sports. Micah Parsons has been the lifeblood for the Dallas Cowboys defense since arriving at The Star four years ago. Few players league-wide on either side of the ball have the same tangible impact as Parsons on the field. Advertisement The time has come for the defensive star to get his first of likely multiple major pay days in his career. This did not sneak up on the Cowboys, but they are clearly in no rush to get this deal done. That's the norm for the Cowboys as frustrating as it may be. The same plot played out last season with Dak Prescott and CeeDee Lamb with Prescott's extension not coming until hours before kickoff. Parsons' loyalty to the Cowboys is unquestioned. Amid these contract disputes with the team he has remained around the team and participated minimally at mandatory minicamp this week. But until the ink dries on that piece of paper – gearing a salary we bet is now going to be in excess of $40 million per year – fans will continue to speculate about what his future looks like. That's why the latest proposal from Anne Erickson at Heavy has him headed to an NFC rival in the Detroit Lions. Advertisement The Cowboys would return a second- and fourth-round draft pick in this theoretical deal. A pairing of Micah Parsons and budding star Aidan Hutchinson would test the limits of the best offensive lines in the league. But that's more likely to happen at the Pro Bowl Games or on a Madden video game. We can argue that there is not a price that can be put on a player who provides production, leadership and wants to stay put. No amount of wish casting will change that reality. But as insider Mike Fisher notes: 'A 2 and a 4? This is peak silliness.' Cowboys owner and general manager Jerry Jones has work to do on his end, specifically in amending the relationship with Parsons' agent. But the player and the owner maintain a strong relationship, so those personal conversations are ongoing. Advertisement This waiting game will likely cost the Cowboys once again, but there's hardly any reason to believe No. 11 will not be suiting up for Dallas through the coming years. Related: Cowboys 'Jump At Chance' to Sign Jaire Alexander is Wrong Answer Related: Micah Parsons Makes Cowboys Announcement for Monday This story was originally reported by Athlon Sports on Jun 14, 2025, where it first appeared.
Yahoo
an hour ago
- Yahoo
Key Home Goods Unveils Limited Edition Cutting Board Collection: Where Functional Art Meets Heritage Craftsmanship
DALLAS, June 21, 2025 (GLOBE NEWSWIRE) -- Key Home Goods, a design-forward brand rooted in old-world craftsmanship and modern heritage, proudly announces the release of its Signature Collection, a limited-edition series of artisan-crafted end-grain cutting boards and designer charcuterie boards that merge timeless form with everyday Home Goods Signature Collection houndstooth cutting board. Each piece in the collection is meticulously handcrafted from American hardwoods, finished with a blend of food-safe oils and waxes, and showcases the brand's distinctive proprietary houndstooth patterns, a visual hallmark that has become synonymous with Key Home Goods. With production strictly limited, every board is reserved for those who seek beauty, exclusivity, and purpose in all that they do. At the heart of this launch is Andrew Key, a seventh-generation Texan, fine woodworker, and the founder of Key Home Goods. What began in 2019 as a pair of custom end-grain cutting boards made as wedding gifts for lifelong friends has grown into a full-fledged pursuit of heirloom craftsmanship. 'I never set out to start just another cutting board company,' says Andrew. 'I wanted to create something truly extraordinary, pieces to be cherished, passed down, and appreciated for both their function and elegance.' The Signature Collection represents more than kitchen tools; it's functional art, thoughtfully designed to elevate the rituals of cooking and gathering. Each board is book-matched for visual harmony, then assembled into a composition that's as structurally resilient as it is visually stunning, honoring the heritage of end-grain cutting boards while pioneering new ground in their design. 'Every board is made slowly, with intention,' Andrew explains. 'Owning a Key Home Goods board is an invitation to savor life's richest moments. A centerpiece for gatherings and a canvas for creating memories with those you love. No two are alike, but every one is designed to be the best board you'll ever own, and the last one you'll ever need.' The Signature Collection is available exclusively at with early access to new releases offered to registered collectors. Each board ships in custom packaging and includes access to the brand's white-glove support and timeless warranty, known as the Timeless Guarantee. Media Contact:Andrew KeyKey Home Goodssupport@ A photo accompanying this announcement is available at in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
Oregon just made the race for an MLB expansion team a lot more compelling
FILE - The Major League Baseball logo is seen on the field before a spring training baseball game between the Pittsburgh Pirates and the Atlanta Braves Tuesday, Feb. 27, 2024, in Bradenton, Fla. | Charlie Neibergall Oregon lawmakers made it clear Tuesday that the state and Portland are all-in on adding a Major League Baseball team. The Oregon House of Representatives voted 46-6 to pass Senate Bill 110 (SB110), which — pending final approval from governor Tina Kotek — would allocate $800 million in bonds to help fund the construction of a professional baseball stadium on Portland's South Waterfront, Oregon Public Broadcasting reported. Advertisement The bonds will not be paid for using any current state revenue, either. Rather they will be paid for through income taxes paid by MLB players and support staff, should Portland land a major league team. 'Tax revenues that are generated from the Oregon personal income tax liabilities shown on the income tax returns filed by the members of a professional athletic team engaged in Major League Baseball, including revenues that are generated from the tax liabilities of spouses of members of a professional athletic team engaged in Major League Baseball,' the bill reads. The bill notes the expected cost of building an MLB stadium in Portland is approximately $2 billion, meaning the remainder of the funding for a ballpark will fall on the team, OPB reported. Portland Diamond Project, the organization behind the push to bring MLB to Oregon, lobbied hard for the bill. Advertisement Craig Cheek, the founder and president of PDP, told OPB, 'Today is an exciting moment for Oregon. Overwhelmingly passing SB 110 is more than securing funding support for a professional baseball stadium, this bill shows Major League Baseball Oregon is excited about America's pastime.' The proposed site of a future ballpark in Portland is the 33-acre Zidell Yards site in the South Waterfront neighborhood. Portland is one of a number of cities, along with Salt Lake City, thought to be in consideration if/when MLB decides to expand. Others in that group include: Charlotte Nashville Montreal Orlando Raleigh San Antonio There is a thought that MLB will expand — or at least have started preparing for expansion — by the time commissioner Rob Manfred's third and final term concludes in 2028. Advertisement Relocation of an MLB team has also been discussed, centering on the Oakland A's last summer, before recently transitioning to the Tampa Bay Rays. On Wednesday, Sportico reported that the Rays may soon have a new ownership group, led by Jacksonville, Florida, developer Patrick Zalupski. The deal is reportedly for around $1.7 billion and Zalupski has signed a letter of intent to purchase the team. Also part of the potential new ownership group, Sportico reported, are: Ken Babby — owner of two Minor League Baseball teams; the Jacksonville Jumbo Shrimp and the Akron RubberDucks. Bill Cosgrove — CEO of Union Home Mortgage, which has been the title sponsor of the Gasparilla Bowl (played in Tampa) since 2020. The Rays are in desperate need of a new ballpark, with Tropicana Field now 35 years old and having suffered significant roof damage caused by Hurricane Milton last year. Advertisement This season, the Rays are playing their home games at the New York Yankees' Steinbrenner Field, the Yankees' minor league complex in Tampa. The roof of the Tropicana Field is damaged the morning after Hurricane Milton hit the region Oct. 10, 2024, in St. Petersburg, Fla. | Julio Cortez ESPN reported in March that the Rays are not going forward with the development of a $1.3 billion new ballpark in St. Petersburg, Florida, which has led to plenty of speculation about potential relocation of the franchise, although in a statement to ESPN, Major League Baseball expressed a commitment to keeping the Rays in the Tampa area. 'Major League Baseball remains committed to finding a permanent home for the club in the Tampa Bay region for their fans and the local community,' the statement reads. 'Commissioner Manfred understands the disappointment of the St. Petersburg community from today's announcement, but he will continue to work with elected officials, community leaders, and Rays officials to secure the club's future in the Tampa Bay region.' Advertisement If Zalupski purchases the team, relocation outside of Florida seems unlikely, meaning cities like Portland and Salt Lake City would have to wait for an expansion phase in order to land an MLB team. If/when expansion comes, Big League Utah — a coalition of prominent Utahns led by the Larry H. Miller Company — believes Salt Lake City is well positioned to land a team. 'I think expansion is taking a bit of a backseat to other priorities that Major League Baseball is dealing with. They know where we are and we have a dialogue with them. But we also respect that there will be a process and that that process hasn't begun yet. The worst thing we can do is try to force ourselves into a conversation when that conversation is not ready right now,' Steve Starks, Miller Company CEO, told the Deseret News last fall. 'We have done everything we can to this point to be the most prepared market for potential expansion and we'll continue to do that.'
