Pay Less For Debt: Credit Card vs. HELOC Calculator
Are you a homeowner looking for ways to put more money into your life? Whether it’s for relief, fun, or just to survive, moving money from a credit card to a HELOC (Home Equity Line of Credit) can save you a lot. Let’s take a closer look at how you can pay less for debt today!
Understanding Your Debt
Nowadays, most of us have more debt than investments. Therefore, it’s smart to spend some time looking at our debt and finding ways to save money.
Example Scenario
Let’s first consider a person with three credit cards totaling $21,000. The average interest rate on these cards is 24%. Therefore, over a year, they will pay about $5,040 in interest.
Now, we know credit cards have different rates and balances, but for simplicity, let’s say each card has a balance of $7,000 with interest rates between 19% and 29%. This gives us an average interest rate of 24%.
If you want to find your average interest rate, you can use a simple spreadsheet. Just plug in your numbers to get a rough estimate.
Moving to a HELOC
What happens if this person moves their $21,000 debt to a HELOC?
A typical HELOC today has an interest rate of about 8.5%. On $21,000, that’s around $1,785 in interest per year.
The Big Difference
Let’s break it down:
- Credit Card Interest: $5,000 per year
- HELOC Interest: $1,785 per year
That’s a difference of $3,200 per year!
What Can You Do with $3,255?
Think about what an extra $3,255 can do for you:
- Go out to lunch
- Take your family to dinner
- Go on a vacation
- Simply enjoy life more
- Or wake up knowing your day will be better without worrying about making payments
Real-Life Impact
This extra money can bring so much relief as well as joy into your life. Whether you decide to use it to get out of debt, enjoy life, or make sure your kids have what they need, the goal is the same: putting more money in your pocket and less in the banks.
Conclusion
By using a HELOC to pay off your credit card debt can save you thousands of dollars each year. As a result, this simple move puts more money in your pocket, and allows you to enjoy life more. Whether you use the extra cash to get out of debt, have fun, or cover essentials, the goal is to relieve stress, as well as improve your financial situation.
Download our spreadsheet in order to see your potential savings, and start making smarter financial decisions today. More importantly, if you found this information helpful, please visit our website for more tips on managing debt and boosting your finances.