Significance

• A credit card may have a high rate of interest and a line of credit may have a lower interest rate. If you pay off the credit card, you may save a substantial amount of money because you will pay less finance charges.
  
  

Taxes

• If you use a home equity line of credit to pay off a credit card, you can pay off other debt as well. Any interest paid can be written off when you file your taxes. The interest you accrue on a credit card cannot be written off on your taxes.
  
  

Benefits

• You can pay down a line of credit faster, with a lower rate of interest, than you can a credit card with a higher rate of interest. More of your payment will go toward the principal balance with a lower rate of interest.
  
  

Types

• You can use a line of credit to pay off credit cards that have an excessive amount of fees such as credit cards for those who are trying to rebuild their credit.
  
  

Expert Insight

• Interest rates on home equity lines of credit are variable. If the interest rates go down based on the index they are tied to, your interest rate will go down. If rates go up, there is a cap on the amount that the interest rate can increase.