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- Increases in home values have made HELOCs an enticing financing tool for consumers.
- Credit cards often come with much higher interest rates than HELOCs.
- Issuers can keep card portfolios healthy by advertising card benefits and marketing to consumers who aren’t comfortable putting their home on the line to secure a HELOC.
Credit card issuers can lose customers to home equity lines of credit (HELOCs), which allow homeowners to borrow money against the equity in their homes. And for cardholders who keep revolving credit on a credit card, HELOCs also offer an opportunity to save money.
Inflationary pressures have caused the price of consumer packaged goods to soar in the 2020s. But if trips to the grocery store over the past few years have left you with sticker shock, then you may want to avoid scanning the prices of homes for sale on Zillow.
Of course, an entire house is going to cost more than the ingredients for a homemade lasagna, but price increases in the housing market have skyrocketed in recent years. According to the Federal Reserve Board of St. Louis, the median sale price of a house sold in the U.S. during 2020’s third quarter was $327,900.
By comparison, during the third quarter of 2022, that figure stood at $438,000, representing an increase of more than 33% in only two years. Quarterly median sales prices have remained relatively stable since then, ranging from $414,500 to $442,600.
The average 30-year fixed rate mortgage in the U.S. was 2.67% on December 31, 2020. Four years later, the average rate has ballooned to 6.9%.
The increase in home prices since 2020 is due to a classic case of demand outpacing supply. And many consumers who locked in enviable mortgage rates in recent years aren’t rushing to sign up for today’s rates.
The average 30-year fixed rate mortgage in the U.S. was 2.67% on December 31, 2020. Four years later, the average rate for the same product has ballooned to 6.9%.
A recent TD Bank survey polled more than 1,800 homeowners who used a mortgage to purchase their home during the last 10 years. Survey respondents indicated — at a rate of 60% — that the favorable interest rates their home-loan provider helped them secure on their mortgage have influenced them to decide not to sell their homes anytime soon.
Home Equity Creates a Credit Card Competitor
A report of rising home values is music to the ears of people looking to make a pretty penny selling their house, but the credit card industry may not greet the news so favorably. Why? As home values skyrocket, consumers can use the equity in their homes to satisfy their credit needs.
Homeowners looking to boost their purchasing power can apply for a credit card. But, according to preliminary figures from the Federal Reserve, the average credit card APR was 21.47% in November 2024. Meanwhile, Bankrate’s figures for the average rate for a $30,000 HELOC at the close of December was just 8.36%.

Michael Gifford is the CEO and Co-Founder of Splitero, a company that helps homeowners access their home equity to pay down debt and achieve their financial goals with no additional monthly payments or new debt. Gifford explained to us that homeowners can save money by using a Home Equity Investment, as opposed to a credit card.
“Credit cards are expensive, and increasingly so,” Gifford told us. “Typically, most homeowners want to think about ways they can access the equity they’ve built up in their house, which an HEI allows you to do without adding more debt or monthly payments. And the equity homeowners have built up in their homes since the pandemic is substantial.”
Doug Perry, Strategic Financing Advisor at Real Estate Bees, agrees that carrying a balance on a credit card can be prohibitively expensive.
“Credit cards are good for short term, low-dollar borrowing needs,” Perry said. “Ideally a situation where you can pay back the balance every month. For larger dollar borrowing needs, which often require longer periods to repay, a HELOC is always a better option.”
Credit Cards Can Strike Back
Many financial institutions offer a variety of lending products. Credit card product managers may feel pressure to keep card portfolio activity strong. But from a boardroom perspective, losing credit card customers to HELOCs may not be too much of a concern.
Credit card issuers concerned with keeping new credit card openings and revolving balances on a growth trajectory may be forced to consider new strategies when trying to woo homeowners who have more affordable financing options.
Issuers can combat waning interest in credit cards by raising awareness of the features that make them unique in the lending arena. According to one study, 49% of respondents cite credit card rewards as the product’s most attractive feature. And 42% would use their card more if it offered enhanced rewards, according to the same study.
When it comes to current homeowners, credit card issuers may face an uphill climb to gain new customers taken with the idea of tapping into their home’s escalating equity.
Issuers can also fend off potential credit card apathy by informing cardholders of a significant drawback of HELOCs. Your house is used as collateral with a HELOC, so lenders can foreclose on your home if you don’t repay them.
Not everyone is a homeowner, which means not everyone is eligible to open a HELOC. And the relatively sparse inventory of available houses on the real estate market signals that consumers will continue to seek other forms of financing in the near future. But when it comes to current homeowners, credit card issuers may face an uphill climb to gain new customers taken with the idea of tapping into their home’s escalating equity.