HELOC vs credit card: what $15,000 costs at 22.15% vs 8%

8 min read · LenderMatch Learn

A HELOC usually charges far less interest than a credit card because your home secures it. Banks averaged 22.15% on credit card accounts that paid interest in the second quarter of 2026, while a HELOC is priced at the prime rate (7.00% as of October 2026) plus a margin. A credit card still wins for small amounts, balances you clear quickly, and a 0% balance transfer you can pay off before it ends.

The trade-off is the collateral: miss HELOC payments and your home is at risk. Below: the two side by side, the cost of $15,000 of card debt four ways, and how a 0% transfer compares. If a HELOC fits, comparing offers from several lenders is how you see your own rate.

HELOC vs credit card: the main differences

Sources listed at the end.

HELOC vs credit card interest rates

The Federal Reserve’s G.19 consumer credit report, released October 7, 2026, puts the average commercial bank credit card rate at 22.15% for accounts that were charged interest in the second quarter of 2026 (22.36% in August, preliminary). Your own card’s rate is on your statement.

Most HELOCs charge the prime rate plus a margin set by your credit, your equity and the lender. Prime has been 7.00% since September 17, 2026 (Federal Reserve H.15); the prime rate page tracks it. With a 1.00% margin, that is 8.00%, roughly a third of the average card rate. Both rates can change: the CFPB says HELOCs usually have a variable rate, “so your payments may change from month to month.”

Secured vs unsecured: what you put on the line

The lower HELOC rate exists because the lender holds a lien on your home. In most cases a HELOC is a second mortgage (see is a HELOC a second mortgage). The CFPB is direct about the stakes: “If you fall behind or can’t repay the loan on schedule, you could lose your home.”

A credit card has no collateral. Falling behind brings late fees, credit damage and possibly a higher rate, but the house is not pledged. Moving card debt to a HELOC trades a higher rate for that risk.

A HELOC can also shrink. The CFPB says that if your home’s value drops significantly, or your financial circumstances change, the lender might freeze or limit further draws.

Minimum payments: where both can keep you in debt

Each card agreement sets its own minimum payment formula. When the minimum is figured as a share of the balance, it shrinks as the balance shrinks, which stretches repayment out. Regulation Z requires your statement to carry a “Minimum Payment Warning” with how long payoff takes at the minimum and what it costs in total, plus the payment that clears the balance in three years. That box is the quickest read on your own cards.

HELOC minimums can be lower still. The CFPB says many HELOCs set minimum monthly payments based on your current balance. If your plan allows interest-only payments during the draw period, the minimum on $15,000 at 8.00% is $100 a month, and after 10 years of it you would have paid $12,000 in interest and still owe the full $15,000. The CFPB also notes that monthly payments “are often significantly higher once you enter repayment.” When the HELOC draw period ends shows what that jump looks like.

Worked example: $15,000 of credit card debt

Assumptions: $15,000 owed at 22.15%, the G.19 average. The card minimum uses an example formula of 1% of the balance plus that month’s interest, with a $25 floor (your card’s formula may differ). The HELOC is at 8.00%: the 7.00% prime rate plus an example 1.00% margin, which may be higher for you. No new charges, and HELOC fees are not included.

The card minimum starts at $427 and falls as the balance falls. Calculated by LenderMatch. Illustrations, not quotes.

At the same $500 a month, the HELOC clears the debt 11 months sooner and saves about $5,266 in interest, before its own costs. The CFPB lists fees a HELOC lender might charge under some plans: an application fee, origination, appraisal, title or other closing costs, an annual or membership fee, an inactivity fee, and a cancellation fee for closing the line early, usually within the first two or three years. Home equity closing costs covers what lenders typically charge.

The HELOC savings come from a lower rate and a fixed $500 payment together. A HELOC paid at its minimum loses most of that edge.

To run your own balances, the debt consolidation calculator compares your current card payments with one HELOC, and the HELOC payment calculator shows both phases of a line.

HELOC vs 0% balance transfer: which wins?

A balance transfer card can beat a HELOC on cost, if you qualify, the limit covers the balance and you clear it during the promotion. Under Regulation Z, a promotional rate must last at least six months. Transfers usually carry a fee charged as a percentage of the amount moved; one national card issuer’s guide notes there is typically a minimum, such as $5 or $10, and uses a 5% fee in its example.

Same $15,000, with an example 18-month 0% offer and a 5% fee ($750, added to the balance), then 22.15%:

• Paying $875 a month clears $15,750 in 18 months. Total cost: the $750 fee.
• Paying $500 a month leaves $6,750 when the promotion ends, which then accrues interest at 22.15%. Total cost: about $1,836 ($750 fee plus $1,086 interest) over 34 months, close to the HELOC’s $1,792.
• With a 3% fee and $500 a month: about $1,435 over 33 months.

Two rules matter. The CFPB has warned that new purchases on a card carrying a promotional balance “may incur interest charges right away,” because you lose the grace period unless you pay the whole statement balance. And a payment more than 60 days late can let the issuer raise the rate on the balance you transferred.

When a credit card makes more sense

• You pay the balance in full each month, so the grace period means no interest.
• The amount is small, so HELOC setup costs and time eat most of the savings.
• You can clear a 0% transfer before the promotion ends.
• You don’t want your home securing the debt, or you have little equity to borrow against.

When a HELOC makes more sense

• The balance is large and will take years to repay, so the rate gap is worth thousands.
• You will pay it down on a fixed schedule, well above the minimum.
• You have solid equity. How much equity you can borrow shows the lender formula, and the home equity calculator runs it for your home.
• The spending is a home project. HELOC interest may be deductible when the money buys, builds or substantially improves the home that secures it (IRS Publication 936); credit card interest for personal expenses is not deductible (IRS Topic 505). See is HELOC interest tax deductible.

Comparing other options: HELOC vs personal loan covers the fixed-rate unsecured route, and using a HELOC for debt consolidation works through paying off several cards and keeping the balances from coming back.

Frequently asked questions

Is a HELOC better than a credit card?

For a balance you will carry for years, a HELOC usually costs far less in interest: banks averaged 22.15% on credit card accounts that paid interest in the second quarter of 2026, while a HELOC is priced at the 7.00% prime rate plus a margin. A credit card is better for spending you pay off in full each month, for small amounts, and when you don’t want your home securing the debt.

Is it smart to use a HELOC to pay off credit card debt?

It can cut your interest sharply, but it moves unsecured debt onto your home. The CFPB warns that if you fall behind or can’t repay a HELOC on schedule, you could lose your home. It works best when you pay the HELOC down on a fixed schedule and stop the card balances from building again.

Is a HELOC better than a 0% balance transfer?

Not if you can clear the balance before the promotion ends. On $15,000 with an 18-month 0% offer and a 5% fee, paying $875 a month costs $750 in total, less than the HELOC in our example. If you can only pay $500 a month, the two cost about the same, and the HELOC’s closing costs and rate changes decide it.

Can you use a HELOC like a credit card?

In some ways. The CFPB says you typically draw on a HELOC with special checks or a card, borrow repeatedly up to your limit during the draw period, and pay interest only on what you use. Unlike a card, the line is secured by your home, usually has a variable rate, and has a draw period that ends, after which you repay the balance.

Is HELOC interest tax deductible if I pay off credit cards?

No. IRS Publication 936 allows the deduction only when the money buys, builds or substantially improves the home that secures the loan. Using it to pay off cards does not qualify, and the IRS lists credit card interest for personal expenses as not deductible either.

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