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    Equity to Partially Solve Credit Card Debt

    Large credit card debt is like a 30-year mortgage.  If you only pay the minimum amount each month, it would take roughly, 30 years to pay it off...assuming you don't add anything new to the balance.

    A $20,000 credit card balance at 18.9% interest with a minimum payment of 2% would take over 30 years to payoff the balance.  In that time, the borrower would have paid $58,256 in interest or three times the amount owed.

    For some people, trying to save enough to pay off credit card debt is futile.  The solution must begin with living within one's means and making it a priority to eliminate credit card debt entirely.

    Part of the problem is the high rates associated with credit cards with average rates of 17% but only for the borrowers with the best credit scores.  Lower credit scores could have a person paying 27% and above.

    A cash out refinance on a home with enough equity could reduce the interest to below 5%.  In most cases, it would still take 30-years to pay off the debt because that is the standard term for mortgages.  The big difference is that the rate would be much lower. 

    An extra $20,000 to pay off the credit cards added to the current mortgage would be $101.34 a month at 4.5% for 30 years plus whatever the payment would be on the refinanced unpaid balance.

    Borrowing the money at lower rates as a part of a cash out refinance can be a legitimate source for the funds that will provide the lowest interest rates available.  There are lots of people that relieved the pressure caused by crippling debt only to build the credit card balances again.  Before using this method, it is important to make decisions with the people in your household that living beyond your means is unhealthy both financially, mentally and physically.

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