Home Equity Loan, Home Equity Line of Credit, 0 Interest Credit Card: Which is Best for You?

In case you haven't been keeping up with the financial news reporting, times are tough all around. Of course, the extremely rich aren't feeling the crunch like the rest of us, but most of us are aware that the job market has tightened up, homes aren't selling, more and more homeowners are defaulting on their mortgages and the economy overall is looking pretty dismal. Some individuals may decide to take advantage of one of the credit card deals, take out a 2^nd mortgage, a home equity loan or establish a home equity line of credit to help their financial situation in these tough financial times. Some options are better than others, though.

One way to come up with some extra spending power that you may be tempted to turn to is to apply for a 0 interest credit card. This and other advertised cards seem like great credit card deals. This is one of the worse ways to manage (or should I say mismanage) your financial situation. If you can't afford to pay for your current lifestyle, charging up more debt is not the answer. Even a 0 interest credit card only means that you'll pay no interest on transferred balances, usually. You'll still be charged interest for all new purchases even on a 0 interest credit card. What happens at the end of the trial period when your 0 interest credit card becomes a 12% or 16% credit card?

Rather than apply for a 0 interest credit card, you could refinance your mortgage. This is a reasonable option if you still have relatively good credit and the original interest rate is 2 or more percent higher than the current going rate. When you refinance your mortgage, you can use the cash to pay off those credit cards and get a little cash in the savings account. The decision to refinance your mortgage is probably a good option if you plan to be in your home for several more years.