By Ryan Marks
Americans are carrying a lot of debt right now, and a big share of it is the expensive kind.
The New York Fed’s latest Quarterly Report on Household Debt and Credit, released in August, put total household debt at $18.8 trillion at the end of June. Credit card balances rose $21 billion in the second quarter to $1.26 trillion. CNBC, covering that release, noted the card total is closing in on last year’s all time high, and that roughly six in ten cardholders carry a balance from month to month, according to the New York Fed.
The Federal Reserve’s own consumer credit report, released October 7, showed revolving credit, the category that includes credit cards, at about $1.35 trillion in August. It dipped that month, but plenty of households are still paying card interest every month.
At the same time, a lot of homeowners are sitting on equity. ICE’s August Mortgage Monitor estimated that 47.5 million mortgage holders have $11.7 trillion in tappable equity, meaning equity that could be reached through a HELOC or a home equity loan. The New York Fed also reported that HELOC balances rose for the 17th straight quarter, to $459 billion.
So the question I keep hearing is simple. Should I use my house to pay off my cards?
Sometimes yes. Sometimes it is a mistake. Here is how I think about it.
What a HELOC actually is
A home equity line of credit is a revolving line secured by your home. The Consumer Financial Protection Bureau describes it as an open end line you can draw on repeatedly during a draw period, which could last ten years. After that comes the repayment period, and the CFPB warns that monthly payments are often significantly higher once repayment starts.
Most HELOCs carry a variable rate. ICE noted in its October 5 Mortgage Monitor that HELOCs are typically tied directly to the prime rate and reset monthly, so changes in short term rates reach HELOC borrowers quickly. Your rate and your payment can go up as well as down.
And the big one: your home secures the line. The CFPB is blunt about it. If you fall behind or cannot repay, you could lose your home.
Where a HELOC can help
Paying off high interest credit cards. Card debt is unsecured and usually priced high. A line secured by your home is often priced lower than unsecured card debt, so moving several balances onto one HELOC can lower the monthly payment and cut the number of bills you juggle. Can, not will. The result depends on your credit, your equity, your terms, and what rates do after you close.
Home improvements. This is the classic use. A HELOC fits projects paid in stages because you draw only what you need as the work moves along. There may be a tax angle too. IRS Publication 936 says interest on home equity loans and lines of credit is deductible only if the money is used to buy, build, or substantially improve the home that secures the loan. Paying off credit cards does not count. Ask your tax professional how that applies to you.
Other common uses. People also use a HELOC to pay down personal loans, cover medical bills, fund a large planned expense, or keep a line open as a backstop. Each one works only with a clear plan to pay it back.
Where a HELOC can hurt
The CFPB lays out the risks plainly in its guidance on consolidating credit card debt.
- You trade unsecured debt for secured debt. Miss a card payment and your credit takes the hit. Miss HELOC payments and your home is on the line.
- A lower payment can cost more overall. The CFPB warns that a lower monthly payment may simply come from paying over a longer time, which can mean paying a lot more in total once interest and fees are counted. Stretching card debt over many years is how a smaller bill turns into a bigger total.
- The cards can fill right back up. New debt used to pay old debt can just kick the can down the road unless spending changes. Run the cards up again and now you carry both.
- Your equity cushion shrinks. Equity you borrow is not there for an emergency or a repair, and if values fall you could owe more than the home is worth. ICE counted about 813,000 underwater borrowers in its August report, up 44 percent from a year earlier.
The CFPB also suggests talking with a nonprofit credit counselor and asking your card issuers about lower payments before you put your home behind the debt. A HELOC should be a deliberate choice, not the first idea.
Self employed? The paperwork question comes first
Many SEI readers own businesses whose tax returns show far less income than they really earn. That can get a HELOC turned down at a bank even with plenty of equity. I break that down in why the bank denied your HELOC and your equity is locked and the bank won’t tell you this.
SEI’s page on the bank statement HELOC explains how deposits can be used instead of tax returns. If the term Non QM is new to you, start with what a Non QM mortgage is and my video on QM versus Non QM for self employed borrowers. If you would rather have one lump sum with a fixed, predictable payment instead of a revolving line, SEI’s closed end second mortgage page covers that alternative.
Here is my full walkthrough on tapping equity without refinancing your first mortgage.
One recommendation: set a payoff date and judge the total cost
Before you open a line, write down the date the consolidated balance will be paid off. Then compare what you would pay in total by that date against what you would pay keeping your current debts, fees included. Test it with a higher rate than today’s, because a variable rate can change.
If the HELOC only wins because the payment is stretched over many more years, it is not saving you money. It is buying breathing room, with your home as collateral. If it wins on total cost, the payoff date is realistic, and you have a plan to keep the cards at zero, a HELOC can be a smart tool. If not, fix the budget first.
SEI Mortgage is educational and does not originate. Loans are originated through Everyday Lending Group and brokered through Arbor Financial Group. Ryan Marks, NMLS 519138. Not available in New York. This post is education, not a credit decision, rate quote, tax advice, or guarantee of approval. A lower payment is not guaranteed, and a longer term can cost more interest overall.
Attribution: New York Fed Quarterly Report on Household Debt and Credit, 2026 Q2; CNBC, August 11, 2026; Federal Reserve G.19, October 7, 2026; ICE Mortgage Monitor, August 10 and October 5, 2026; CFPB; IRS Publication 936.
If you want to talk through whether tapping your equity makes sense for your situation, start at www.seimortgage.com.
