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use up too much leverage.

Tips on Using Equity to Pay off Credit Cards:

*Negotiate Credit Card Rates First: One may be able to lower the credit card interest rate through credit counseling services or directly with the credit card company. This can save one's home equity and monthly expenses.

*Finance Large Debt: If the debt is large, the potential savings increase than with smaller debt. It may not be worthwhile to take a home equity loan for small amounts of credit card debt.

*Vehicle Collateralize: In some instances, a newer or luxury vehicle can be used as collateral for a loan with more favorable interest rates than credit cards. By considering a vehicle collateralized loan, one can save with a lower interest rate and protect the equity in one's home.

Home equity loans can be a good idea, if the financial circumstances deem them necessary to cut costs and save money. However, it is important to note such loans may not be worth the effort or the cost after mortgage recalculations, unexpected costs requiring future credit card use. The primary factors one may think about prior to obtaining a home equity loan to pay off credit card debt are the size of the debt, the potential cost savings, future cash flow needs and other lower cost sources of financing the credit card debt pay-off. Should the equity loan still be favorable after such factors are entered into the equation, the loan may be worthwhile.

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