When it comes to borrowing money, many people wonder:
Is a HELOC more dangerous than a credit card?
The answer?
Yes… and no.
Let’s break it down using real examples so you can decide what’s right for your situation.
How HELOCs Are Less Risky Than Credit Cards
Let’s start with interest. That’s the big one.
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Most credit cards charge around 24% interest.
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A HELOC (Home Equity Line of Credit) is closer to 8%.
So, if you owe $10,000…
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A credit card might cost you $2,400/year in interest.
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A HELOC? Just $800/year.
That’s a difference of $1,600 — and that money stays in your pocket instead of going to the banks.
That’s a huge win for your budget.
Lower monthly payments mean less stress and fewer risks of falling behind. You’re also not paying extra just to carry the debt.
How HELOCs Are More Risky Than Credit Cards
Now let’s talk about the risk.
A HELOC is a mortgage. That means it’s tied to your house. If something goes wrong and you miss payments:
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It affects your credit more than a credit card would.
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You could even face foreclosure.
That’s a big deal.
You’re giving up equity in your home and putting your property on the line. This is why you should only use a HELOC if you know where your repayment will come from.
If lowering your interest helps you get ahead, great.
But if you’re falling behind already, a HELOC might only delay the problem.
What About a Refinance Instead?
If you’re thinking about using your home to consolidate debt, a HELOC is usually a smarter option than a full refinance.
Here’s why:
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Refinances roll your entire mortgage into the new loan.
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If your current mortgage is at 3%, why bump the whole thing to 6% or 7%?
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A HELOC lets you borrow just what you need, at a lower cost (sometimes as little as $500 vs. $5,000+ for a refinance).
Plus, most HELOCs let you borrow up to 80–85% of your home’s value.
So, Is a HELOC More Dangerous?
Only if you’re not careful.
✅ If you need to lower your payments and have a plan:
A HELOC can save you thousands and reduce financial stress.
⚠️ But if you’re struggling to make payments already:
Tying that debt to your house could make things worse.
Download Free Tools
Want to see the real numbers for yourself?
📥 Download our free tools at Smart with Debt:
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Credit Cards vs HELOCs
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Refinance vs HELOCs
These side-by-side comparisons show how much you could save — or risk — based on your situation.
Make your debt work for you, not against you. Contact us today to find out more.
That’s what being Smart with Debt is all about.
Watch our most recent video: “Is a HELOC More Dangerous Than a Credit Card?”
