use home equity line of credit?

rb5505 · #1 (**permalink**) 07-06-2010, 05:58 PM

we have a charge card with $3k on it at a 6.5% fixed interest. would it be wise to pay it off with our home equity line of credit which is 3% variable interest (the rate hasn't varied at all since we got it)? seems the lower rate and deductibility of the interest would make this an easy decision? or not?

#2 (**permalink**) 08-03-2010, 11:55 AM

Its not the best idea to turn "unsecured credit" (your credit card debt) into "secured credit" (your mortgage)

If things were to go really badly for you the mortgage company could start foreclosure proceedings, on the other hand the credit card companies can only just harrass you and give you a poor credit rating...but you'd still have a roof over your head

The balance seems small...divide into equal increments and pay it religiously

Good luck

krantcents · #3 (**permalink**) 12-10-2010, 08:47 PM

How long will you need to pay it off? Obviously, there is a risk of interest rates going up next year! Are you considering this because you want a lower interest/payment? Are you doing this to make the interest tax deductible?

littleroc · #4 (**permalink**) 04-01-2011, 11:53 AM

So in the end, what have you paid off? All you've done is transfered the debt to another line of credit.

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