The variable interest rate of the HELOC is currently at 10%. I have a credit card offer of 3.9% on balance transfers until it is paid in full.
Feb 27
I’m a homeowner with no debt except my mortgage. We financed 90-10-10 (2nd loan = homeowners line of credit with an adj rate). That rate has climbed up to 7.5% and i’m always getting credit card offers for 0% APR for the first 6 – 12 months. Is there any good reason i shouldn’t max 1 of these out to pay down my 2nd mortgage? Besides the obvious:
1. credit score? i’m not planning any big loans soon…
2. i could ***** up and miss a payment and get hit with a big penalty
3. i might forget that i am not rich and start spending my entire loc until my credit is so hosed i can’t tranfer my balance elsewhere.
4. tranfer fees. The cards i’m looking at charge 3%, but with a max of $75 so that is peanuts compared to my interest savings.
1. credit score? i’m not planning any big loans soon…
2. i could ***** up and miss a payment and get hit with a big penalty
3. i might forget that i am not rich and start spending my entire loc until my credit is so hosed i can’t tranfer my balance elsewhere.
4. tranfer fees. The cards i’m looking at charge 3%, but with a max of $75 so that is peanuts compared to my interest savings.
Is this not the easiest way for me to save a grand this year? I figure when the intro expires, i’ll rotate the balance to another 0% intro as long as i can qualify and drop back to my 2nd mortgage at ~7.5 as backup.
Seems like free money, what am i missing?
to be clear, i have NO intention of paying off the amount in 12 months or less. It will take more like 5 years. Putting it on a card is a temporary solution. I would definatly leave my loc at the bank open as the backup plan… thanks.
Thanks for the answers so far, but why is everyone assuming that i might get stuck paying high interest to a credit card? Worst case, as soon as the introductory rate expires, i would move the balance back to my HELOC. The HELOC is safe and is not going away. Btw, we’ve been in this home for 2 yrs and we’ll need a good credit score in 3 yrs or so to refinance. The primary mortgate is locked in nice and low for 5 years, so i probably won’t refinance early.
Also, the tax deduction pt is well made, but has little merit when comparing paying interest vs. not. 
6% on a credit card vs. 7.5% from my HELOC: i’d have to do the math, but 0% + a $75 fee far outweighs my tax savings.
Maybe what i really need to consider is the damage to my credit score and the time for it to recover back to where i can get the best possible re-financing in 3 years… cheers!
