Debt consolidation with a HELOC
High-rate revolving debt is one of the most expensive ways to borrow money in America. Your house, paradoxically, can be one of the cheapest. Stack up your debts, tell us about your home, and we'll show you both paths side by side.
Not all debt is priced the same. The trick is paying the most expensive dollar off first.
Stack up your debts
Add each balance you're carrying — credit cards, store cards, a personal loan, anything revolving. Adjust the balance and APR for each. You can add up to ten lines.
What's a HELOC?
The trade-off is real and worth saying plainly: you're moving unsecured debt onto your house. Miss enough payments on a credit card and your credit score takes a beating. Miss enough payments on a HELOC and the bank can foreclose. The math below assumes you're disciplined enough not to run the cards back up after consolidating.
Tell us about the home
Your borrowing power on a HELOC depends on how much equity you have. Most lenders cap your combined loan-to-value (CLTV) at around 85% — meaning your mortgage plus the new HELOC can't exceed 85% of the home's value.
Path A — Pay each card on its own
The default path: keep each balance where it is, and pay the minimum each month. The minimum-payment rule (about 1% of the balance plus that month's interest, with a $25 floor) keeps you out of collections but barely touches the principal.
Your first month's combined minimum payment is about $405. That feels manageable — and it's exactly why so many people stay stuck for years.
Path B — Consolidate with a HELOC
Now imagine you draw $13,400 from a HELOC at 9.00% and pay off the cards in one shot. You then pay the HELOC back on a fixed schedule, just like a small mortgage.
The two paths, side by side
Same total debt, paid two different ways. The copper line is the cards on minimums; the mint line is the HELOC. Notice how the mint line dives down on a fixed schedule while the copper line drags on for years.
Why the HELOC ends up cheaper
Three things are working in your favor on the HELOC path. First, the rate is a fraction of what cards charge — the bank is willing to lend cheap because your house is the collateral. Second, fixed amortization forces principal paydown every single month; there's no minimum-payment trap to keep you spinning. Third, you replace many small interest meters with one larger one running at a much slower rate.
The honest counter: the rate is variable on most HELOCs, so it can rise. And if you don't actually change the spending behavior that built the card balances, you'll end up with a HELOC payment and new card balances. The math only works if the cards stay at zero.
Your numbers, side by side
| Cards | HELOC | |
|---|---|---|
| Months to debt-free | 22 yr 2 mo | 10 yr |
| Monthly payment (start) | $405 | $170 |
| Total interest paid | $23,765 | $6,969 |
| Total paid | $37,165 | $20,369 |
See current HELOC rates
The numbers above use a national-average HELOC rate. Ready to see what real lenders are quoting today? Browse current offers and compare APRs side-by-side.