Benefits Of Using A Home Equity Loan To Consolidate Credit Card Debt
If you feel like you'll be making credit card payments for the rest of your life, you aren't alone. In fact, approximately 38.1 percent of households in the United States have credit card debt that totals over $15,000, on average. It doesn't take long for credit card debt to become a massive financial burden, and there are many people who struggle just to maintain the minimum monthly payments on their credit cards. The good news is, you can consolidate your debt and regain control of your personal finances using a home equity loan. Learn more about how using a home equity loan to pay off your current credit card debt can benefit your family.
One Monthly Payment
Paying numerous credit card bills every month can be taxing. However, if you want to maintain a good credit rating, you have to at least pay the minimum amount due for every credit card every month. However, when you use a home equity loan to pay off all of your credit card debt, you're combining all of those small payments into one monthly payment. The amount that you'll pay on your loan each month is preset, so you don't have to worry about varying payment amounts each month either.
Lower Monthly Payments
Many credit cards offer a low introductory rate. However, once the introductory period is over, the annual percentage rate for the card raises. Credit cards typically carry annual percentage rates that range from 13.12 percent to 22.99 percent. These rates increase frequently increase if you're pay your monthly bill late, and can go as high as approximately 29.99 percent. However, a secured loan, such as a home equity loan, could have an interest rate as low as five percent, and you might be able to deduct the amount of interest you pay on your taxes. In many cases, a lower interest rate alone will lower the amount of money you're paying out on a monthly basis. However, you can also shop around for a home equity loan that gives you the longest repayment terms. The longer you have to make payments on the loan, the lower your payments will be. So, by obtaining a low-interest home equity loan with an extended repayment time, you can potentially save a lot of money each month.
If you're a homeowner who is struggling each month to pay off the credit card debt you've accumulated, you should consider using a home equity loan to consolidate your credit card debt. Chances are, you'll end up paying out less money on a monthly basis and decrease the overall amount of interest you've paid to satisfy the debt.