Business & Finance

Homeowners weigh risks and savings of using home equity to consolidate debt

Borrowers face trade-offs between lower interest rates and the risk of home foreclosure when shifting credit card balances into home equity loans.

Updated Aug 31, 2026 · 18:23 UTC1 reports

The short version

Average credit card APRs sit near 22%, while average home equity borrowing rates are closer to 7%.
Using home equity to pay off credit cards converts unsecured debt into secured debt, risking home foreclosure if payments are missed.
Variable-rate HELOCs expose borrowers to payment uncertainty if broader interest rates rise.
Financial experts advise borrowers to establish disciplined spending habits to avoid accumulating new credit card debt alongside equity loans.

Average credit card interest rates sit near 22%, whereas home equity loans and lines of credit average closer to 7%.[CBS News]
Consolidating credit card debt into a home equity loan converts an unsecured obligation into a secured one tied to the borrower's residence.[CBS News]
Defaulting on a home equity loan or HELOC introduces the possibility of property foreclosure.[CBS News]
Many home equity lines of credit feature variable interest rates that adjust alongside broader market trends.[CBS News]

The exact interest rate a borrower receives depends on individual creditworthiness, chosen debt products, and lender terms.[CBS News]
Future interest rate policy and inflation trends remain uncertain, affecting potential long-term HELOC costs.[CBS News]