31% of homeowners don’t know home equity can help clear credit card debt — but is it a smart choice?

Financial experts often describe credit card debt as a major drag on American household wealth.

Federal Reserve data puts total credit card debt at about $1.26 trillion. With average credit card interest rates now above 20%, it is easy to see why paying down balances quickly matters so much.

There are several ways to attack credit card debt, but many homeowners appear unaware of one obvious option: refinancing through a home equity loan.

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A recent survey from debt relief company Achieve found that 31% of Americans did not know this was possible. Gen Z was the least informed group, with 60% saying they had never heard of home equity loans as a financial tool.

That gap in awareness could be costing homeowners significant money in extra interest each year. Comparing an average credit card rate of 22.15% with the national average for home equity lines of credit, or HELOCs, at 7.5%, Achieve estimated annual interest savings of $1,197. In states including Connecticut, New Jersey and Maryland, the difference topped $1,600.

Even with those numbers, many homeowners still said they were uneasy about putting their property at risk.

Why are borrowers hesitant about HELOCs?

For many Americans, real estate has a special place as a leading source of wealth. Gallup survey data has long shown that Americans rank real estate as the top long-term investment, and 37% held that view in 2025. That is well ahead of gold at 23% and stocks at 16%.

That strong attachment to property may help explain why some homeowners are reluctant to use a HELOC, even when the financial case looks stronger.

Achieve found that 42% of respondents saw using home equity as collateral as more “risky” than carrying a credit card balance with 21% interest. Another 54% said they would rather avoid using their home equity even if it meant paying more interest.

When asked why, the most common response was that homeowners did not want more debt tied to their home, which 46% cited. Another 32% said they believe in never borrowing against a home, while 28% worried about foreclosure.

That caution stands out at a time when 60% of Americans with credit card balances say they feel trapped in a debt cycle, according to a Freedom Debt Relief survey. Still, many people seem unwilling to view their homes as part of the solution.

With the right guidance, though, more homeowners may be open to replacing credit card debt with a HELOC. Nearly half of respondents, or 46%, said they would seriously consider the idea if they could clearly see the savings. Even so, 43% wanted reassurance that their home would not be put in danger.

Is a HELOC the right move for you?

As with any borrowing strategy, a HELOC is not a universal fix. Kyle Enright, president of lending at Achieve, told Moneywise that every consumer’s situation is different and several factors should be weighed when choosing the best debt payoff plan.

In his view, the best candidates are homeowners with steady income who are struggling to keep pace with credit card interest. They may be making monthly payments, but their balances barely seem to shrink.

“The opportunity is especially compelling for someone with a low interest rate on their existing mortgage,” he said. “A separate home equity loan or HELOC lets them address expensive credit card debt without refinancing their entire mortgage at market interest rates that are higher than their existing loan.”

It is important to remember that foreclosure can still happen if payments are not made, whether the borrower chooses a HELOC or a home equity loan. A HELOC works more like a credit card, offering a revolving line of credit with a variable rate. A home equity loan, by contrast, provides a lump sum at a fixed rate.

Enright said borrowers can be surprised by terms such as fixed or variable APRs, interest-only payment periods, or balloon payments due at the end of the loan term.

Most importantly, homeowners using their house as collateral need to make sure the new payment fits comfortably in their budget, even if unexpected expenses arise. Taking on more debt would defeat the purpose of the strategy and could expose the home to unnecessary risk.

Even though HELOCs can deliver substantial interest savings, they should not be taken out without careful research. A lower rate does not automatically make them the better financial option. Borrowers still need a plan to pay the debt off quickly and avoid piling on new credit card charges.