Ready to Consolidate That Debt?
IF YOU'RE A homeowner saddled with debt (and we're talking about high-interest debt like the kind you pile up on credit cards), then a home-equity line of credit, or HELOC, might be a good escape hatch. After all, the average credit card now carries an annual percentage rate (APR) of around 14%, whereas the average APR for a $30,000 HELOC is about 8.2%, according to Bankrate.com. And that's before you consider the tax break on your interest payments.
From a pure number-crunching perspective, consolidating high-interest, nondeductible debt into a HELOC or a home-equity loan, or HEL, is a no-brainer. Of course, your home is the collateral for such a loan, and foreclosure could leave you bunking down in Mom's den. So look in the mirror. If you're the type who will simply accumulate more debt once you've wiped the slate clean on your credit cards, forget the loan.
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