Used strategically, a HELOC can help homeowners save money this October and in the months that follow.
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If you're a homeowner, you may have an untapped resource you're sitting on: home equity. In fact, the average homeowner has hundreds of thousands of dollars in available home equity, according to an August report. In the current borrowing climate, a home equity line of credit (HELOC) is often a more affordable alternative if you need to consolidate high-interest debt, pay for major expenses, or manage financial uncertainty.
Average HELOC rates currently stand at 8.05%. On the other hand, average credit card interest rates are more than double that, coming in over 21%, according to Federal Reserve data. Average personal loan interest rates are around 12%. Due to the substantial difference in interest rates, a HELOC could help you save money this October if you need financing. We spoke to several experts to get the specific details.
Start by seeing how low your current HELOC rate offers are here.
Here's how a HELOC could save you money this October
Homeowners can access home equity in a variety of ways. But HELOCs, in particular, are appealing as they're flexible and you can continue to draw funds for a period of time. Here are some ways that a HELOC could save you money this October.
Consolidating high-interest debt
If you have high-interest credit card debt, a HELOC may be able to help. Credit card balances hit $1.21 trillion in the second quarter of 2025, according to data from the Federal Reserve Bank of New York. While the average credit card interest rate is more than 21%, some credit card APRs could be around 28%. You can save money by consolidating credit card debt with a HELOC, with average rates at 8.05%.
"In my experience, switching high-interest debt to a HELOC can slash those payments by half or more," says Steven Glick, director of mortgage sales at HomeAbroad, a real estate investment fintech company specializing in mortgages for foreign buyers.
Of course, you must address the issues that led to the credit card debt in the first place for consolidating to be effective. But if you do so, consolidating with a HELOC could have a meaningful difference on the total interest you pay.
"Say you have $50,000 in credit card debt with an average interest rate of 22%. If you could refinance that using a HELOC at a 10% rate, the potential annual interest saved would be around $6,000," says Jordan Banning, certified financial professional at Crafted Financial Planning. "That is real money that can be used to get out of debt quicker and regain control of your financial life."
Consolidating this October could be a smart move, as another Fed rate cut could be on the horizon. Based on data from the CME Group's FedWatch tool, another rate cut at the October meeting is likely. If that's the case, that could be welcome news for HELOC borrowers.
"If somebody is consolidating a bunch of high-interest debt into 8% to 10%, they should be able to ride the escalator down, because HELOCs, home equity lines of credit, unlike mortgage rates, have more of a direct one-to-one connection with Fed policy," says Mark Anderson, senior loan officer at Guild Mortgage.
Learn more about how a HELOC could reduce the cost of your credit card debt here.
Financing major expenses
You may have a major expense that seemingly comes out of nowhere. Even if you planned for it, you may not have enough on hand because of inflation or cash flow issues. In these cases, a HELOC can be a solid financing solution.
"For big costs or emergencies like a roof replacement, medical bills, or even college tuition, it's a go-to because you can access funds quickly without reapplying each time," says Glick. "Unlike a lump-sum loan, you draw only what you need, and it's often cheaper than alternatives. The key is using it for needs, not wants, to keep things sustainable."
Lower monthly payments
HELOCs are a unique borrowing product in a couple of ways. First, you can access your line of credit during the draw period. Secondly, you might only have to pay interest during the draw period, which could lead to lower monthly payments than other borrowing products.
"On the home equity line of credit, you're reducing your interest rate, you're also changing it to an interest-only payment. It's a way that can kind of make it artificially look as if you're saving more money than you are," says Anderson.
Once you enter the repayment period though, that's when your monthly payments can increase substantially.
"Once the draw period is over, that's when you're actually compelled under the loan agreement to start really paying it off," adds Anderson. When used responsibly with careful planning, a HELOC can help you now. However, if you can afford it, it can be a good move to pay down your HELOC early.
Potential tax advantages
Homeowners can use a home equity line of credit for many reasons, but one option may come with potential tax advantages.
"If you use HELOC funds specifically to buy, build, or substantially improve your home like adding a kitchen remodel or finishing a basement, the interest you pay could be tax-deductible as mortgage interest, up to $750,000 in total debt," says Glick.
Before getting started, it's important for you to discuss the details and your eligibility with a tax professional. Glick also suggests keeping good records, including receipts related to the home improvement project.
A lower-cost backup plan
Your emergency fund should always be plan A. But if that's not available or it's in progress, you might need to turn to plan B. A HELOC could be a solid backup plan if you need financing and don't necessarily have the cash on hand.
"The way most HELOCs work, you only pay interest on the amount you use, as well as an annual fee. Sometimes it's just nice to have the option available, even if you don't need to use it right now," says Banning.
So, if later on, you face a layoff or a surprise expense, you could have access to a HELOC as a backup plan.
"While I wouldn't substitute a HELOC for having a 3-6 month cash reserve, it can provide extra security while you build up your emergency fund and then continue to provide additional flexibility and liquidity if ever needed in the future," adds Banning.
This could help you save money this October if something arises. You won't have to turn to credit cards with much steeper interest rates and can instead utilize a HELOC and take advantage of its lower rates.
The bottom line
A HELOC could provide valuable benefits if used properly. If you're trying to pay off credit card debt, but the interest rate is making it challenging to get ahead, a HELOC can be a good solution if you also address the underlying issue. For other major expenses or renovations, a HELOC may be something to look into, but only if it's a necessity. On the one hand, HELOCs provide maximum flexibility. On the other hand, repayment can be a jolt to your finances if you're not prepared.
If you want more stability with your repayment, you can look into other home equity borrowing options. For example, a home equity loan typically comes with a fixed interest rate and term. Home equity loan rates are in the same ballpark as HELOC rates, but could be slightly higher.
Before moving forward, research rates and fees with multiple home lenders. Understand your monthly payments, interest charges, and terms so you know what you're getting into.
