How to How Consolidate Credit Card Debt To Save Money if You Own a Home
If you own a home and have a whole load of credit card debt, you can consolidate the debt using a home equity loan and save a lot of money.
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Things You'll Need
- A home with equity
- List of credit cards and debt levels
- Good credit score
- Bank
Instructions
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First, list out all of your credit cards and debt level for each. Ensure that your debt level is lower than your home equity. You can include car loans and student loan in the consolidation as well.
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Head to a local bank with good home equity loan interest rates. Check out bankrate.com for competitive home equity rates. Explain your situation to the banker.
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Negotiate a home equity loan with the banker. Tell the bank to mail payoff checks directly to the credit card companies. Once the balances are paid off, do not use the credit cards anymore. Keep the balances at zero to raise your credit score. Alternately, consolidate your new loan with your current mortgage so you only have to make one monthly payment
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Your home equity rate is likely going to be in the range of about 7%. The average credit card rate is closer to 20%. You are likely saving 13% per month and have a set payoff date for the loans.
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Tips & Warnings
Shop around for the best home equity loan rate
Find a reputable bank to make your loan.
Pay off the loan and work to be debt free.
Do you build up high credit card balances again. That is far from the point of what you are doing.
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Comments
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Sandra Mireles
Apr 06, 2009
Thanks for the advice and the discussion. Interesting points of view.
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ccard123
Apr 06, 2009
Good tips if you are confident that you will be able to avoid bankruptcy. thanks! 5*
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katecrittendon
Feb 24, 2009
CAUTION: Sorry to yell, but I was a banker for a long time and can't let this one slide.If you don't do this and have to file bankruptcy, your primary home equity has a good deal of protection under bankruptcy laws. If you do this, a good deal of that protection is lost, and you are more apt to face foreclosure and lose your home.Banks are not required to tell you this, and it is not in their best interest to tell you. Sorry to be a wet blanket. In some circumstances this may be a good way to go, just please be aware that it's a slippery slope.
