Credit card debt is one of the most prevalent forms of debt in the American society, considering how each and every individual today uses at least one credit card for their purchases and whatnot.  Add in the factor that most of the economic and financial system is now going towards a cashless system, and credit cards suddenly gain more importance.

But, while it does offer convenience and peace of mind (for not carrying cash and being PIN-protected), it also has its set of cons, with the biggest one being the credit card debt that people rack up at first and then struggle to pay up. You could try not to use the credit card, but it’s just so damn convenient. Well then, what can you do? Well, you could use other means, which include using home equity loan to pay off credit card debt.

An unconventional means, boil the statement down and you’re left with the very basic, banal idea of taking out a loan to pay off a loan, which is actually pretty common in the world, for some reason. It’s also the most logical, considering your only choice to pay off the debt (which you can’t pay by yourself) is by taking out a loan to provide for the cash. Seems redundant and stupid, but really isn’t. So, what is a home equity loan and how can you use it to pay off your credit card debt. 

The first thing you need to know is that credit card debt is a transferable debt, meaning that the bank or lending authority can legally ‘sell’ your debt to another party or a collection agency, which unfortunately for the borrower means that there’s no escape. By hook or crook, the money is coming out of the pocket of the borrower, whether they like it or not, or can afford it or not.

So, the best way out would be to secure a loan, one that is easy to get and requires a collateral (to make things easier); and that loan would be a home equity loan. 

Pros Of Using Home Equity Loan to Pay Off Credit Card Debt

One of the frequently asked questions regarding this rather unconventional method of paying off credit card debt is what does a person stand to gain from the seemingly illogical act of taking out a loan to pay off another loan. Well, lets face it: the way the contemporary financial system is set up, we’re bound to pay off loans for the entirety of our lives anyway, so why not delve deeper in it?

Either way, the first pro is the fact that taking out a home equity loan for credit card debt will set you up financially at a stage where you will be able to make the monthly payments without them eating away at your paycheck.

The second pro would be the fact that a home equity loan uses your property as collateral for the loan and therefore, incorporates in it easy repayment terms, with the terms of the loan often extending up to 30 years of repayments, which eases off the strain of the repayments from your source of income.

Also Read: Truth Behind Direct Deposit Loans

Cons Of Using Home Equity Loan to Pay Off Credit Card Debt

As you can guess, this method also has its fair share of cons, mostly associated with the unorthodox method of paying off the credit card debt. However, the requirement of taking out a home equity loan in itself is a con; you can only consider this an option if you have a property that’s worth a certain amount of money, which is usually not the case.

Then comes in the fact that you’re putting a huge asset as collateral for a loan, which could potentially make you lose your house (only in the case of extended non-payment of the loan amount, in which case the house will be foreclosed by the bank or lending authority and sold to recoup the amount originally lent).

This is a worst-case scenario; losing your home over credit card debt, but it is still possible, which makes it one of the biggest deal breakers for this sort of repayment plan.

How to Use Home Equity Loan to Pay Off Credit Card Debt

The simple matter of fact is this; credit card debt carries much more interest rates and therefore, bumps up the monthly repayments to unaffordable levels. At the same time, home equity loans, considering the extended terms of loan repayments, offer low interest rates, which make up for a great idea; using a home equity loan to pay off the credit card debt, which eventually, equals a win-win situation as you pay less interest on the home equity loan than the credit card debt. 

So, how can you do it? Well, for starters, you obviously need a property (house, commercial property or any other sort) that matches the amount that needs to be borrowed (not a stringent requirement). As a general definition of a collateral, the property needs to be in tune with the value of money being borrowed. 

If you have a property which can be used as a collateral, you can start by applying for a home equity loan at a bank or a credit institution, which will send a home appraisal team or individual to the property. This individual or team will determine the total value of the property and will be instrumental in determining whether or not the loan gets approved or not. Once they report back with their findings of the actual property value, the bank or credit institution will then check and confirm your credit score, the risk attached to it and then, will you be approved for the loan.

Also Read: Mortgage Loans for Non Profit Organizations

Once the loan has been approved and taken out, you can use it to make the monthly payments for the credit card debt; or you can work out an arrangement with the credit card issuing authority to pay a lump sum amount in one go, ensuring that the fiasco gets ended once and for all. This is especially recommended, as paying the lump sum amount will ensure that no further interest is accrued on the monthly repayments, making it a lower payment cumulatively. 

So, yes, you can use a home equity loan to pay off your credit card debt and considering the whole interest situation, it is actually recommended that you do so (but only if the monthly payments somehow exceed a payable amount and cause much financial issues). And of course, an added requisite is the fact that you will need a property to take out such a loan. 


Taking out a home equity loan to pay off credit card debt might sound unreasonable and unfeasible at first, but a closer look at the details and the facts might convince you otherwise. It is actually a great way to get rid of the high-interest credit card repayments and substitute them with low-interest, long-term loan repayments using a property as collateral and securing a loan against it, that can be then repaid without it becoming a big financial burden.

It has both pros and cons, but the simple matter of fact is that the pros easily outweigh the cons of using home equity loan to pay off credit card debt.

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