Posted on: 06th Sep, 2011 10:25 pm
Hey there… I've a charge card with a balance of $5k on it at a 6.5% fixed interest. Will it be a good option to pay off the charge card with the home equity line of credit which is 4% variable interest?
Hi Gallaway,
A charge card is an unsecured debt, i.e. you don't have a collateral against that debt. However, a HELOC is a secured debt. In my opinion, it won't be a good option to convert an unsecured debt into a secured debt. In my opinion, it will be better if you could pay off the charge card at a 6.5% fixed interest.
Thanks
A charge card is an unsecured debt, i.e. you don't have a collateral against that debt. However, a HELOC is a secured debt. In my opinion, it won't be a good option to convert an unsecured debt into a secured debt. In my opinion, it will be better if you could pay off the charge card at a 6.5% fixed interest.
Thanks
I agree with James, its not like you are paying 20% on 30k of debts. Try contacting the bank and ask for a reduction in your interest. Tell them that you just got a 0% 6 mos balance transfer and you want to close the account if they dont. 9 out of 10 times that works...If not, apply for a 0% balance transfer card and knock down that 5k...Good luck
In general, using a heloc for debt consolidation is a great idea, but for the size of the debts and interest concerned it's probably not worth it if there are aplication fees associated with the heloc.
If you're planning on doing more than just paying off the debt then a heloc could be a great idea, but if it's just to knock down 5K at 6.5% then it's probably not worth it.
If you're planning on doing more than just paying off the debt then a heloc could be a great idea, but if it's just to knock down 5K at 6.5% then it's probably not worth it.