Should I Transfer Credit Card Debt to a Home Equity Loan? – Jake

“Hi Steve,

I have $20K on one credit card with an 8.99% APR. I am making the minimum payments and the last few months have paid more than the minimum.

Is it a smart move to transfer this balance to an equity line of credit through the company that has the mortgage on my house which will be at 4.00% APR? Will this save me a lot of money and help me pay off this debt sooner?

Thanks very much!


Dear Jake,

While making that move might make good financial sense, I would only do it if you were absolutely certain that your job and income are not at risk in this economy.

As long as that debt is sitting out on a credit card it can be discharged in bankruptcy if things got unexpectedly bad for you. Once you move it over to the house then you are stuck with it.

If you do not have several months of cash saved and available then the better approach is to drop back to the minimum payment on this card and use all your extra cash to save. See my article “Don’t Pay More Than the Minimums on Your Credit Cards“.

Once you get a comfortable emergency fund setup then start paying more than the minimum but leave the debt off the house for now. Let’s wait to see some daylight on the other side of this bad economy before doing that.

Does that make sense?


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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