From CBS News · Matt Richardson · · 1m 20s
Home equity rates beat credit cards by 15 points
HELOCs and home equity loans offer significantly lower rates than credit cards and personal loans right now.
In brief
HELOCs and home equity loans offer significantly lower rates than credit cards and personal loans right now. Home equity borrowing costs around 8% versus 23% for credit cards, making it a far cheaper option for homeowners needing cash. Originally reported by CBS News.
Credit cards cost 23% interest
Personal loans hover around 12% while credit card rates recently hit 23%. Both options make borrowing expensive right now.
Home equity averages $300,000
The average homeowner has over $300,000 in equity. This makes home equity loans and HELOCs viable borrowing options.
Current rates around 8%
Home equity loans average 8.14% while HELOCs average 8.03%. Both are significantly lower than credit cards and personal loans.
How each product works
Home equity loans provide a lump sum with fixed rates and immediate repayment. HELOCs offer revolving credit with variable rates and interest-only payments initially.
Tax breaks for renovations
Interest paid on home repairs and renovations may be tax deductible. This applies to both HELOCs and home equity loans for IRS-eligible projects.
Your home is collateral
Missing payments could lead to foreclosure since your home backs the loan. Shop around carefully to find rates and terms that fit your budget.
What matters most
Home equity borrowing costs around 8% versus 23% for credit cards, making it a far cheaper option for homeowners needing cash.
