How To Pay Your Credit Card Bills Faster

Should You Use Your Home Equity To Pay Off Credit Card Debt?

Many people who are deep into credit card debt think of using their home equity to pay off their loans. This can be either good or bad depending on how good you are at managing money. The three main benefits of doing this are:

1. Low rates of interest.

The interest rate on your home equity account will be three, four, or more percent cheaper than the interest rate on your credit card. This lets you keep more of your money in your pocket.

2. Pay off loan faster.

Since you have a lower rate of interest,, you will be able to liquidate your debt a lot quicker. For instance, assume that your credit card annual interest rate is 20% and your balance is $5,000. If you pay the balance off in 12 months, you’ll pay approximately $5,558 total. If, you transfer your debt to your 5% home equity loan, you can pay this debt off in only 11 months.

3. You simply end up paying less money.

Taking the identical circumstances as above, with the 20% rate of interest, by year’s end you’ll have paid $5,558. but with the lower home equity rate, you’ll only pay $5,138, nearly 9% less. And the bigger the amount of your credit card debt, the more you benefit by transferring your balance.

Should you always transfer your credit card debt to your home equity account? No. But it does help to remember that you always have options in disposing of your debt.

David Hoyer is a freelance writer who writes articles relating to buying a car after bankruptcy. For information on chapter 13 bankruptcy explained, bankruptcy student loans, and bankruptcy credit report visit his site.

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