Home Equity Loan
Credit Card or Home Equity Line of Credit?
I am a full-time graduate student with 3-years left to go. I have amassed about 7K of credit card debt. While I have gotten my finances under control to not get anymore in debt, I am having a hard time making a dent in my balance and I won't be able to anytime soon. I also have a home equity line of credit and the minimum payments are much lower. Should I transfer my credit card balance to my home equity?
Public Comments
- The interest rate is the important thing to look at. In most cases a line of credit will have lower interest than a credit card and would be a good place to transfer your debt, but I'm not sure specifically about a home equity line of credit. You could always ask your bank about options.
- It partly depends on your interest rate on your credit card. You can call your cc and ask for a rate reduction, hopefully you have a good credit score and no late payments. You may also be able to open another credit card that offers a low or 0% interest on balance transfers. If you do have a high interest rate on your current credit card a home equity line of credit may benefit you temporarliy. If you only make the min payment it will still take forever to pay off your debt. The interest rates are usually adjustable on lines of credit. A home equity loan has a fixed interest rate. The other positive is that the interest on your home equity line may be tax deductable for you, the cc interest is not.
- Don't turn unsecured debt on a credit card into something that is secured by your home. The difference in percentage rates is not worth the risk. Work a part time job in addition to what you are already doing, donate plasma, do what you have to do and pay that credit card off. If your credit is good you should be able to transfer your balance to a low rate or zero rate card for a while, as a previous poster mentioned.
