Home equity loan vs. HELOC: Which option is right for your credit card payoff plan?

Both home equity borrowing options can be smart card debt payoff tools, but it’s important to know which one is best.

Credit card debt has become increasingly expensive to carry over the last few years, and for borrowers who are already struggling to make progress on their balances, today's high interest rates can make the problem even harder to solve. With average credit card rates now hovering above 22%, it's easy for a significant amount of each monthly payment to go toward interest rather than reducing the balance. That can leave borrowers searching for a less expensive way to pay off what they owe.There are a few different ways to do that, but homeowners, in particular, may have an option that other borrowers don't. Home values have risen considerably over the last several years, allowing many homeowners to build sizable amounts of home equity, even as higher mortgage rates have slowed activity in the housing market.

And that equity can be borrowed against, often at rates that are substantially lower than those charged on credit cards, which could make it useful for consolidating high-rate balances.But while a large portion of homeowners have equity they can tap into, the question is how to access that equity. Two common options are home equity loans and home equity lines of credit (HELOCs), and while both use your home as collateral, the similarities largely end there. The way you receive the funds, how your interest