Accessing Your Home Equity Line of Credit - with a Debit Card

Right now, electronic transactions are becoming more and more desirable. And this includes for things like accessing your home equity line of credit (HELOC). In fact, the latest trend in this area is for banks to issue you a debit card. This means that you can swipe the debit card, and the money comes from your home equity line of credit. Although it is important to realize that really, such a set-up is really more like using a credit card. Because your HELOC is borrowed money.

Convenience of accessing your home equity

The main argument in favor of the HELOC debit card is how easy it is to access your home equity. Instead of going to the bank to withdraw money for a home improvement project, all you have to do is go to the store and swipe your card. We have managed to convert nearly everything else into paying with plastic; why not the home equity line of credit.

Pitfalls of a HELOC debit card

Even though it may be more convenient, it might not be better to access your home equity with a debit card. Do you really think about the purchases you make on a credit card? This works in much the same way. You are really using it as a credit card, so it can be easy to lose track of how much you are borrowing and accessing with your debit card.

Another thing to think about is the fact that home values are declining. Your lender may restrict your home equity line. Or you may be using the debit card to get you into a negative equity situation. With home values down, you may find yourself upside down on your mortgage before you really realize what is happening.

Also, remember: a HELOC is secured debt. This means that your home is on the line when you get a home equity line of credit. You should think of your HELOC debit card as a credit card. But the important difference is that a credit card is unsecured debt, while a HELOC debit card represents debt that is secured with your house. This means that if things get too much for you to handle, your home could be repossessed.

It is always important to consider whether or not a home equity line of credit is a good option. And in these economic times, it is especially important to consider the implications of getting a home equity line of credit. And you should be wary of anything that allows you easier access to the equity in your home.