Should You Use Your Home Equity To Pay Off Credit Card Debt?
Filed Under General | Leave a Comment
How To Pay Your Credit Card Bills Faster
Many people who are deep into credit card debt think of using their home equity to pay off their loans. This can be either good or bad depending on how good you are at managing money. The three main benefits of doing this are:
1. Low rates of interest.
Your home equity account interest rate will probably be at least 4 or more percent less than your credit card interest rate. This lets you keep more of your money in your pocket.
2. Pay off loan faster.
Since you have a lower rate of interest,, you will be able to liquidate your debt a lot quicker. For instance, let’s say that the annual interest rate on your credit card is twenty percent and you own $5,000. If you manage to pay off the balance in 12 months, you’ll have paid $5,558 total. If, however, you transfer your debt to your 5% home equity loan, you can pay this debt off in just 11 months.
3. You wind up paying less money.
Taking the identical circumstances as above, with the 20% rate of interest, by year’s end you’ll have paid $5,558. but with the lower home equity rate, you’ll only pay $5,138, nearly 9% less. And the bigger the amount of your credit card debt, the more you benefit by transferring your balance.
Should you always transfer your credit card debt to your home equity account? There’s no hard and fast rule. The important thing is to simply take stock of all the options you have when paying off a debt.
Visit David Hoyer’s website at bankruptcy on credit report for more financial articles on topics as bankruptcy options, chapter 13 bankruptcy explained, and buying a car after bankruptcy.
Check These Out Too
- Should You Set Up Faux Wood Window Blinds Or True Wooden Blinds? | Second Hand Sofas
- Getting a House Cleanup Service | Sweet Spot Podcasts
- Hints on Creating Your Bathroom Greener
Comments
Leave a Reply
