HELOC vs. home equity loans: Which should you use to pay off expensive credit card debt?
The recent spike in the cost of living has forced many people to resort to credit cards to keep their family budgets from bursting. “The majority of people struggling with credit card debt aren’t doing so because they’re irresponsible,” Austin Kilgore, with the Achieve Center for Consumer Insights, tells the New York Post.“They are struggling to deal with essential expenses.”On the other hand, Cotality, a property information and analytics provider, recently released a report showing that “the average borrower now has about $295,000 in accumulated home equity” at the end of 2025.
Though many Americans are feeling squeezed by a dramatic rise in prices over the last six months, they are sitting on a lot of home equity that can be used to zero out their bad, expensive credit card debt.Many are already tapping into that reserve.According to a joint 2026 study by Freedom Debt Relief and Money.com, nearly one-quarter (24%) of borrowers carrying substantial unsecured debt have borrowed against home equity in the past 12 months to consolidate their balances.Credit card debt is expensive relative to other kinds of debt because the average interest rate on a credit card balance has reached an all-time high. According to Lendingtree, the average APR offered with a new credit card is currently 23.79%, up from 23.75% in April. That means if you have $5,000 in debt on a card at that rate, you will owe $98.75 in interest alone every month.
Making the minimum payments, it will take you 200 months — almost 17 years — to pay off that debt, assuming you don’t charge anything else to that credit card in the meantime.This calculation isn’t just a hypothetical worst-case scenario, it’s an everyday reality.The Freedom Debt Relief/Money.com survey found that 28% of borrowers with significant debt can only afford to make the minimum required payments each month—a figure that spikes to 34% for millennials and 36% for Gen Z.
When interest rates hover near 24%...