Debt Consolidation HELOC

High Interest Credit Card Debt & The HELOC

High Interest Credit Card Debt & The HELOC Treasury Funds Home Loan, Inc.

Several factors could contribute to credit card interest rates reaching all-time highs

Historically, credit card interest rates have fluctuated based on various economic factors, including the Federal Reserve’s monetary policy, inflation rates, and lenders’ risk assessments. When interest rates are low, credit card issuers often offer lower rates to attract customers. Conversely, when interest rates rise, credit card rates tend to follow suit. A few factors that contribute to credit card interest rates:

Economic Conditions

In times of economic uncertainty or recession, lenders may perceive greater risk in extending credit to consumers. As a result, they may raise interest rates to offset potential losses from defaults.

Federal Reserve Policy

The Federal Reserve sets the benchmark interest rate, which indirectly influences credit card rates. If the Federal Reserve raises its rates to combat inflation or stimulate economic growth, credit card issuers may increase their rates correspondingly.

Risk Assessment

Lenders consider the creditworthiness of borrowers when determining interest rates. If lenders perceive a higher risk of default among consumers, they may raise rates to mitigate potential losses.


Despite these general trends, competition among credit card issuers can also influence interest rates. Some lenders may offer lower rates to attract customers or gain market share, while others may increase rates to maintain profitability.

Higher credit card interest rates can have significant implications for consumers. They may lead to increased borrowing costs, making it more expensive for individuals to carry balances on their credit cards. This can potentially exacerbate debt burdens for those already struggling with repayment.

In response to rising interest rates, consumers should consider strategies to manage their credit card debt effectively. This may include paying off balances in full each month to avoid accruing interest, transferring balances to cards with lower rates or exploring alternative forms of financing with lower interest costs, such as a Home Equity Line of Credit.

Obtaining a home equity mortgage loan can potentially save a person from high credit card debt through a process known as debt consolidation.

Benefits of a HELOC

Lower Interest Rates

Home equity loans typically offer lower interest rates compared to credit cards. Credit card interest rates can be quite high, often ranging from 15% to 25% or more, depending on the card and the individual’s creditworthiness. In contrast, home equity loans typically have lower interest rates since they are secured by the borrower’s home. By consolidating high-interest credit card debt into a lower-interest home equity loan, borrowers can reduce the overall interest they pay over time.

Single Monthly Payment

Managing multiple credit card payments can be overwhelming and increase the likelihood of missed or late payments, which can negatively impact credit scores. By consolidating credit card debt into a home equity loan, borrowers have the advantage of making a single monthly payment, simplifying their debt management and reducing the risk of missed payments.

Potential Tax Benefits

In some cases, the interest paid on a home equity loan may be tax-deductible, whereas credit card interest is not tax-deductible. Borrowers should consult with a tax advisor to determine if they qualify for any tax benefits associated with a home equity loan.

Fixed Repayment Term

Home equity loans typically have fixed repayment terms, meaning borrowers know exactly how long it will take to repay the debt and can budget accordingly. In contrast, credit card debt can linger for years, especially if only minimum payments are made each month. Having a fixed repayment term can provide borrowers with a clear timeline for becoming debt-free.

Let Treasury Funds Home Loans, Inc. show you how much you may be able to save with a Home Equity Line of Credit today!