SMART BORROWING
Home Equity Line of Credit vs. Credit Card

Your fridge is on the fritz.Your child's tuition payment is due.Your basement is dark and dank, but – with a few modifications – it could become the home theater of your dreams.Where do you turn to cover such expenses? Your first instinct might be to reach for your credit card, thinking it's the most convenient option. But although a credit card offers unbeatable convenience and security for expenses when you're traveling, dining out or shopping at the mall, a home equity line of credit (HELOC) may save you money on larger purchases.

CONVENIENCE THAT FITS
A HELOC taps the buying power of your home.You can use a HELOC to pay for anything you want or need – home improvements, education funding, debt consolidation, medical expenses, even travel – while taking advantage of flexible financing and interest rates that are tough to beat.

At FCU, a HELOC comes with a credit card pre-approved for a certain spending limit, so you can conveniently withdraw money when you need it. And as you pay back your credit line, those funds become available to borrow again.

LOWER RATES
HELOC rates nearly always beat credit card rates, including credit cards' introductory offers. Over time, using a HELOC instead of a credit card can result in significant savings (see chart). Unlike a credit card, the interest on a HELOC may also be tax-deductible, further lowering your cost to borrow.*

Compare the Costs How much more does credit card debt cost than a HELOC? In the example below, a consumer spends $10,000 each on a credit card and HELOC, and pays off the debt over 10 years. * Amount shown is the total of principal and interest payments. There may be additional fees. Rates shown are for illustration only. Source: Bankrate.com.

THE POWER OF A HELOC
In addition to using a HELOC to cover large expenses, you may wish to use it to consolidate your high-interest credit card debt. For more information about tapping into the equity in your home, stop by FCU, call (800) 284-1144 or visit www.flcu.org.

* Consult your tax advisor concerning eligibility.