Are HELOC rates lower than credit card rates? What borrowers need to know

HELOC rates are typically lower than credit cards.* Understanding why HELOC rates are usually lower and how they work can help you decide if it is a good option for you. 

A home equity line of credit, or HELOC, works in two periods: a draw period and a repayment period. During the draw period, you have access to an approved amount you can make draws on as needed, similar to a credit card. Then during your repayment period, you cannot make draws and will have to repay the funds you borrowed. While you are in both periods, you will have to make interest payments on the amount that you accessed. 

Are you looking to take advantage of the lower rate that a HELOC typically could give you? Start your application today. 

HELOC vs. credit card: How do current rate ranges compare?

While both a HELOC and a credit card offer you a line of credit you can draw on, the rates on each of them vary. Understanding how the rates differ could help you determine which option is right for you. 

How does the interest rate on a HELOC or credit card affect payments?

The interest rate on a HELOC or credit card is the cost you will have to pay to borrow funds.  

With a HELOC, you will pay interest on the amount you borrow through both the draw and payment periods. With a credit card, you will pay interest on any amount that you do not pay off at the end of the billing cycle. 

Your HELOC interest rates are tied to the prime rate plus a fixed margin. It typically sits between 7% and 9%. Credit card interest rates are often over 20%. 

Why are HELOC rates typically lower?

The rates on HELOCs are typically lower than credit cards because your HELOC is secured by your home, while credit cards are unsecured loans. 

HELOCs are typically second mortgages that let you access the equity you have in your home. Because they use your home as collateral, your rates are typically lower. However, if you default on HELOC payments, you could risk losing your home.  

How does a variable-rate HELOC compare to a credit card rate?

While a variable-rate HELOC could still be lower than your credit card rate, payments are more unpredictable. 

With a variable rate, the amount you pay in interest will regularly change according to where rates currently are. This means that some payments may be higher than others. A variable rate can make planning future payments difficult, as it is hard to predict where rates are going.  

Even if the rate on your variable-rate HELOC rises, it is unlikely that your rate will ever get as high as the rate on a credit card.  

Does it make sense to use a HELOC to consolidate credit card debt?

If the interest rate on your HELOC is lower than your credit card, it could make sense to use your HELOC to consolidate your credit card debt. A lower interest rate could reduce the amount you will spend on paying down your loans and could lead to more savings**. If you have multiple high interest credit cards, you could consolidate your monthly payments under your HELOC. 

Using your HELOC to consolidate your credit card debt won’t remove any amount owed, but it could transfer it to a HELOC with a potentially lower rate. 

How can I apply for a HELOC today?

You can apply online for a HELOC today through a trusted lender, like Rate. 

If you are looking to apply for a HELOC, applications with Rate can be completed in as little as five minutes and give you access to your line of credit in as soon as five days. If you have high interest credit card debt, your HELOC funds can be used to consolidate them under a lower rate. 

Ready to apply for a HELOC? Start your application today! 

_{*Source: Average credit card interest rate is 25.28% (Forbes, Jan 2026) vs. our HELOC starts at 8.9% (subject to change) – which is 65% lower.} 

_{**Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate for current rates. Restrictions apply.} 

_{Applications may be completed in five minutes but may fluctuate. Five business day funding timeline assumes closing the loan with our remote online notary. Funding timelines may be longer for loans secured by properties located in counties that do not permit recording of e-signatures or that otherwise require an in-person closing. In addition, funding timelines may be longer if we cannot readily verify that your property is in at least average condition with no adverse external factors with a property condition report and may need to order a desktop appraisal to confirm the value of your property. Texas borrowers will have a 12-day cooling period prior to closing on their home equity loan which will begin after the borrower has both filed a loan application and received consumer disclosures.} 

_{Rate's HELOC is a fixed-rate open-end product using your home as collateral. Not available in all states. Go to rate.com/HELOC for information including important property and borrower requirements and restrictions which impact rate and max available loan amount. Subject to approval.}