Using a home equity loan or HELOC to consolidate debt
A home equity loan or line of credit borrows against your house to pay off cards. The rate is lower than a personal loan, and the house is the security.
Home equity is the cheapest money most homeowners can borrow. It also turns unsecured card debt into debt secured by your home.
Here is what it costs next to a personal loan, and when that trade is worth it.
Home equity loan vs debt consolidation loan
The table compares the two on $30,000 of card debt.
| On $30,000 | Personal loan | Home equity loan |
|---|---|---|
| Rate | 11.9% bank average, fixed | 7.39% bank average (6.78% at credit unions), fixed |
| Payment | $666 a month over 5 years | $354 a month over 10 years |
| Total interest | $9,949 | $12,526 |
| Security | None; the loan is unsecured | Your house |
| Costs to set up | Origination fee at some lenders | Closing costs and an appraisal may apply |
| Speed | Often days | Usually weeks |
Home equity rates now
In Q2 2025, a five-year fixed home equity loan averaged 6.78% at credit unions and 7.39% at banks. A line of credit up to 80% of the home’s value averaged 7.61% at credit unions and 8.05% at banks (NCUA).
The bank average for a 24-month personal loan is 11.9% (Federal Reserve G.19). Cards charged interest average 22.36%.
Home equity loan payment on $30,000
At the 7.39% bank average, $30,000 over 10 years is about $354 a month and $12,526 in interest. Over 15 years it is $276 a month and $19,722 in interest.
A personal loan at 11.9% over 5 years is about $666 a month and $9,949 in interest. The longer home equity term can cost more in total, even at a lower rate.
Try your own amount, rate and years on the loan calculator.
The risk: your house secures the cards
Card debt you cannot pay hurts your credit. Home equity debt you cannot pay can cost you the house.
A line of credit usually has a variable rate. After the draw period you repay over 10 or 20 years, and those payments are often much higher (CFPB).
When home equity makes sense
It fits a steady income, a large balance, and a plan not to run the cards back up. Closing costs and an appraisal can apply, so ask the lender for every fee.
If any of that is shaky, an unsecured loan keeps your home out of it. Compare both on the debt consolidation calculator.
Related topics
Before you borrow
Is it smart to use a home equity loan to consolidate debt?
Only with a steady income and a plan to keep the cards empty. The rate is lower, but missed payments put the house at risk.
Is a HELOC or a home equity loan better for paying off cards?
A home equity loan has a fixed rate and payment. A HELOC usually floats, and its payment can rise after the draw period.
What is the payment on a $30,000 home equity loan?
At 7.39% over 10 years, about $354 a month.
Weigh home equity against an unsecured loan
You own a home and carry card balances. A lower rate is only worth it if the payment fits for the whole term. Call and a specialist compares an unsecured offer with a home equity loan for your numbers.