Real Estate Community Forum

I am thinking of possibly taking out a home equity loan to make some repairs on my house. I would hope to use some of the extra cash from the home equity loan to pay off some high credit card bills. One of the reasons for putting money on the credit cards is because the interest rate for a home equity loan is usually much lower than the interest rate for a credit card. Is this correct? Does anyone recommend doing this?

I have done this in the past and it is a great idea to save money on the finance charges with a lower interest rate home equity loan. I caution anyone considering this to make sure you use the new loan responsibly and close the credit card accounts that you pay off.

I'll second that sentiment. Not only are home equity loans generally at a lower rate than credit cards, you can also write off the interest at tax time. Of course, the most important thing is to shred those credit cards once they are paid off so that you don't incur additional debt.

Another reason against transferring the debt from credit cards to your home is that it doesn’t address the underlying root problem (this is for cases where the debt is the result of runaway spending, if you have the debt for reasons outside your control like medical expenses or unexpected emergencies, feel free to skip this paragraph).
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Raajsai
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alora
Finance Loans