You Have $100,000 in Home Equity and $25,000 in Credit Card Debt. Should You Tap the House?

A homeowner with $100,000 in home equity and $25,000 in credit card debt should compare interest costs, fees, repayment terms and foreclosure risk before using the house to consolidate the debt – Shutterstock

Having $100,000 in home equity and $25,000 in credit card debt creates a tempting mathematical shortcut: Borrow against the house, wipe out the cards, and move on. On paper, the idea can look almost suspiciously tidy, especially when a home equity loan or HELOC offers a lower interest rate than the cards.

But there is a crucial detail hiding underneath that tidy math. Credit card debt can hurt your budget, but home-secured debt puts the house itself on the line, so the right answer depends on more than the interest rate.