The main advantage of using a home equity loan to pay off credit card debt is that you’ll secure a much lower interest rate than what you are paying on your credit cards.
For instance, the average interest rate on a home equity loan is average around 5 %, while the average credit card could be ranging more than 19%.
When you use a home equity loan to pay off credit cards, it will also simplify your life, where you will have just one bill to pay each month instead of several bills.
Earlier the interest you paid on a home equity loan was tax-deductible, which has been suspended, at least for the next few years.
But credit card interest was not deductible. Because of the Tax Cuts and Jobs Act of 2017, only if you use the loan to either buy, build, or improve your home that secures the loan then the interest on home equity loans was deductible.
Now that provision is put on hold for at least until 2026.