HELOC vs Credit Card: Which Is Better for Large Purchases?

Last updated: February 2026

Credit cards charge an average of 23% APR. HELOCs average 7.44%.

That's not a small difference. It's nearly three times more expensive.

If you're financing a major purchase—home renovation, medical bills, or consolidating debt—this rate gap could save you thousands. Or cost you thousands if you choose wrong.

Here's how to decide between a HELOC and a credit card for your next big expense.

---

The Rate Difference Is Massive

Let's put real numbers on this.

What does 3x more expensive look like?

On a $50,000 balance paid over 5 years:

That's not pocket change. That's a car. A year of college. A kitchen renovation.

---

When to Choose a HELOC

A HELOC makes sense when:

Your purchase is $10,000 or more. The savings compound on larger amounts. Below $10K, the application hassle may not be worth it.

You're doing home improvements. Double benefit: lower rate AND the interest may be tax-deductible (since the funds improve your home).

You need flexible access over time. Renovating in phases? Draw what you need, when you need it. You only pay interest on what you borrow.

You're consolidating high-interest debt. Replacing 23% credit card debt with 7.44% HELOC debt is basic math. You'll pay less every month and pay it off faster.

You can repay within 10 years. HELOCs have draw periods (typically 10 years) followed by repayment periods. Plan accordingly.

---

When to Choose a Credit Card

A credit card makes more sense when:

The purchase is under $5,000. Smaller amounts don't save enough to justify the HELOC application process.

You'll pay it off within a 0% intro period. Many cards offer 12-21 months at 0% APR. If you're confident you'll pay the balance before that ends, you beat both options.

You don't want to risk your home. This is the big one. Credit cards are unsecured. Miss payments and your credit suffers—but nobody takes your house.

You need money today. HELOC applications take days or weeks. Credit cards work instantly.

You want rewards. Some large purchases earn significant cashback or points. On a 2% cashback card, a $10,000 purchase earns $200. Worth considering if you're paying it off quickly.

---

The Risk Factor: Secured vs Unsecured

Here's what most comparison articles gloss over.

A HELOC uses your home as collateral.

That means if you can't make payments, the lender can foreclose. It's unlikely if you miss one payment—but it's a real risk if your financial situation deteriorates.

Credit cards are unsecured.

Worst case? Collections, credit damage, potential lawsuit. Stressful and expensive, but nobody takes your house.

When does this risk actually matter?

• Job stability uncertain? Credit card might be safer
• Income stable but tight? HELOC's lower payments actually reduce risk
• Using funds for something that adds home value? HELOC risk is offset by equity gain

Be honest with yourself. The lower rate isn't worth it if you're gambling with your housing security.

---

How Much Can You Actually Save?

Let's break down three scenarios.

$25,000 Purchase (5-Year Repayment)

$50,000 Purchase (5-Year Repayment)

$100,000 Purchase (10-Year Repayment)

The larger the amount and longer the timeline, the more a HELOC saves.

---

The Application Tradeoff

HELOC timeline:

• Application: 1 day
• Processing: 1-2 weeks
• Appraisal: 3-7 days
• Closing: 1-2 days
• Total: 2-6 weeks (HonestCasa: as fast as 7 days)

Credit card timeline:

• Application: 5 minutes
• Approval: Instant to 7 days
• Card arrives: 7-10 days
• Total: Same-day to 2 weeks

If you need money for an emergency, credit cards win on speed. If you can plan ahead, a HELOC's lower rate is worth the wait.

---

The Best of Both Worlds Strategy

Smart move: Don't choose. Use both strategically.

Set up a HELOC for:

• Large, planned expenses
• Home improvement projects
• Debt consolidation
• Emergency backup (better than credit card interest)

Keep credit cards for:

• Daily purchases and rewards
• Small unexpected expenses
• True emergencies when you need money NOW
• 0% intro period opportunities

The power move: Use your HELOC to pay off existing high-interest credit card debt. Then use the credit cards responsibly for convenience and rewards—paying the balance in full each month.

---

The Bottom Line

For purchases over $10,000: HELOC almost always wins. The rate difference is too significant to ignore.

For purchases under $5,000: Credit card is often simpler. Just pay it off fast.

For anything in between: Do the math. If you're keeping a balance for more than a year, a HELOC probably saves money.

But always remember: A HELOC uses your home as collateral. Lower rates come with higher stakes. Borrow responsibly.

---

Ready to Compare Your Options?

HonestCasa shows you real HELOC rates with no commitment. See how much you could save compared to credit card interest—without affecting your credit score.

[Check Your HELOC Options →]

---

FAQs

Is a HELOC better than a credit card?

For large purchases over $10K, typically yes. HELOC rates average 7.44% versus 23% for credit cards—saving thousands in interest over time. But credit cards are safer since they don't use your home as collateral.

Can I use a HELOC like a credit card?

Yes. HELOCs are revolving credit—you can draw funds, repay, and draw again during the draw period (typically 10 years). The key difference: HELOCs use your home as collateral and have much lower interest rates.

Should I pay off my credit card with a HELOC?

Often, yes. Replacing 23% credit card debt with 7.44% HELOC debt saves significant money. But only do this if you won't run the credit cards back up—or you'll have both debts.

What's safer: HELOC or credit card?

Credit cards are safer from a collateral perspective. They're unsecured debt, so the worst case is credit damage and collections. With a HELOC, your home is at risk if you default. But responsible use of either is the best safety strategy.