Credit card charges for holiday gifts and travel are coming due this month. Rather than try to pay those and other debts, consider consolidating them into a home equity loan or line of credit. Tropical Financial Credit Union offers both at money-saving rates.
If you’re struggling to pay off your credit cards, you’re not alone. Bankrate found that half of the cardholders it surveyed in October had an outstanding balance every billing cycle. Six out of 10 cardholders had been in that situation for at least 12 months. And less than half of those surveyed had a plan for reducing their balance to zero dollars.
You don’t have to be among those struggling with cards and other debts. Consider these advantages of tapping into your home equity over other forms of borrowing. You can:
- Pay a lower interest rate. Home equity loans and lines of credit typically offer much lower interest rates than credit cards and other high-interest-rate debts. Why? Because the debt obligation is secured by a portion of your home’s value. Slashing your interest rate can save you a lot of money over time.
- Enjoy a fixed interest rate: Many home equity loans have fixed rates. By contrast, card issuers can raise rates whenever they want, provided that they give you advance notice. A fixed rate means predictable, steady payment and protection against higher interest rates and inflation.
- Make only one monthly payment: Instead of paying multiple companies by cash or card, your debts will be rolled into one home equity loan. Simplifying your finances can reduce the stress of looking at a stack of printed or electronic bills.
- Avoid fees and charges. Not only will you have an easier time paying down your debt, but you will also avoid late payments and other potential charges often associated with credit cards. At Tropical Financial, you can pay off your equity loan or line of credit without a prepayment penalty.
- Enjoy a longer repayment term: Home equity loans often offer more flexible and longer repayment terms compared to credit cards and personal loans. Many lenders offer terms of 5 or 10 years. Tropical Financial offers those, plus 15-year and 20-year terms.
- Improve your credit score: Here’s why: Paying off high-interest-rate credit card balances with a home equity loan can improve your credit utilization ratio. It represents the amount of revolving credit you're using (those outstanding balances) divided by the total credit (the card limits) available to you. That can boost your credit score over time.
- Maybe take a tax deduction. The interest paid on a home equity loan may be tax deductible, providing additional savings come tax time. Consult with a tax professional to understand your specific situation.
To learn more about current interest rates and how to get a home equity loan through Tropical Financial, check out this page on our website or give us a call.
