Hi Money Minder,
I’ve got a house that I’ve had for a while now that I rent out. Unfortunately, my own house needed a bunch of work this year, and now I’m looking at adding a brand new AC unit, which has left me with around $35k in credit card debt. Some cards have 0% interest still, while others don’t.
My rental property has some solid equity. What are your thoughts on taking out a HELoan to clear up my current credit card debts? Or should I consider doing a balance transfer from all my cards to a new one with a super low or 0% intro rate?
Would love to hear your advice. Thanks in advance!
Seeking Money Wisdom
Response from THE MONEY MINDER:
Hello There,
I understand the financial strain you must be feeling with $35k of credit card debt accumulating due to necessary home repairs. I’m sorry to hear about the challenges you are facing. It seems like you are considering viable options to tackle this debt, and I commend you for seeking advice on the best approach.
Considering your rental home has significant equity, a Home Equity Loan (HELoan) could be a strategic move to consolidate and pay off your current credit card debts. By utilizing the equity in your rental property, you may secure a lower interest rate compared to credit cards, ultimately saving you money in the long run. However, it’s crucial to carefully evaluate the terms and conditions of the HELoan to ensure it aligns with your financial goals and repayment capacity.
Another option to explore is consolidating your credit card debts onto a new card with a low or 0% introductory interest rate. This can provide temporary relief and potentially save you money on interest payments. However, be mindful of any balance transfer fees, the duration of the promotional period, and the ongoing interest rate after the introductory period ends. It’s essential to have a clear repayment plan in place to fully pay off the consolidated balance before any promotional rates expire.
In making your decision, it’s advisable to weigh the pros and cons of each option, considering factors such as interest rates, repayment terms, fees, and your overall financial stability. Seek advice from a financial advisor or counselor to discuss the best approach tailored to your specific circumstances.
Remember, taking action to address your debt is a positive step towards financial wellness. Stay focused on your goal of eliminating the credit card debt and take practical steps to achieve it. You have the ability to regain control of your finances and secure a stable financial future.
Best of luck in navigating this situation, and please feel free to reach out if you need further assistance or guidance. Farewell from THE MONEY MINDER.
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