Paying Off Your Credit Card Balances With Your Home Equity

Using Home Equity To Pay Off Credit Card Debt

If you owe a lot of money on your credit card, you may be thinking of using your home equity to pay off your loans. Is this a good idea? Sometimes yes. Sometimes No. Here are the 3 primary benefits of doing so:

1. Reduced interest rates.

Your home equity account interest rate will probably be at least 4 or more percent less than your credit card interest rate. This will let you keep more of your hard earned money in your pocket.

2. Pay off loan faster.

Because your interest rate is lower, you can pay off your debt much faster. For example, assume that your credit card annual interest rate is 20% and your balance is $5,000. If you pay the balance off in 12 months, you’ll pay approximately $5,558 total. If, you transfer your debt to your 5% home equity loan, you can pay this debt off in only 11 months.

3. You pay less money overall

Taking the identical circumstances as above, with the 20% rate of interest, by year’s end you’ll have paid out $5,558. With the lower home equity interest rate of 5% , however, you’ll end up paying only $5,138 – a savings of nearly 9%. If your credit card debt is bigger or the disparity in interest rates rider, your savings will be even more.

Should you always transfer your credit card debt to your home equity account? No. But it does help to remember that you always have options in disposing of your debt.

Please see D. Hoyer’s bankruptcy site for more information on chapter 13 bankruptcy explained, bankruptcy credit reporting, and buying car after bankruptcy filing.

Related posts:

1. The Pros and Cons of Home Equity Loans With a Home Equity Loan you can borrow money...
2. 3 Ideas For Doing away with Unsecured credit card Debt When it comes to eliminating credit card debts, regrettably...
3. The vacation season is piling on consumers credit cards be free from credit card debt with the help of credit card debt relief Because of the winter holiday in full swing the...
4. Advice on credit card debt reduction Enormous numbers of Americans have been getting trapped in...
5. Credit Card Debt Management Though a lot of people are comfortable with going...