Want To Better Manage Your Money? Start By Getting The Best Rates On Outstanding Balances

If you are one of the millions of Americans paying 15 percent or more interest on credit card balances and carrying a revolving balance greater than $10,000, that debt is costing you a bundle in interest payments.

According to bankrate.com, the average American pays more than 16 percent in interest. If you are carrying between $4,000 and $15,000 in credit card debt, that equates to hundreds, maybe thousands, of dollars spent on interest alone. Unless you have money to burn, getting a good handle on the amount of interest you pay is a good way to better manage your money.

“Generally, a home equity line of credit (HELOC) will charge a lower interest rate than credit cards because you are using the equity in your home as collateral,” says Derek Wong, vice president of Credit Products at First Hawaiian Bank. “In addition, a HELOC from First Hawaiian Bank provides you greater convenience and flexibility to manage your finances, since you can draw from the account for the entire term, subject to your credit limit.

“While you may use credit cards out of convenience, larger balances may be difficult to pay off each month. Using a HELOC to regularly consolidate your bills and centralize your payments can help you better manage your finances,” says Wong.

Here’s how it works: “If you have a relatively small balance, you could use one of the low introductory rates to pay off your balance as you continue to use your line,” says Wong. “If you plan to make larger purchases, or have a larger balance that you know will take longer to pay off, you can benefit from locking in that balance with a fixed rate for up to 10 years.”

If you own a home on Oahu, it’s possible that your property value has increased, and likely so has your equity. This provides you with a great opportunity to take advantage of that equity to consolidate debt at a much lower interest rate. If you are like most consumers, and you carry a month-to-month balance on your credit card, it will immediately pay off to reduce the amount of interest you are paying. Even if you pay off your credit cards in full every month, having a HELOC for large, unexpected expenses that a credit card may not cover may be a great idea.

So how much of an equity line of credit can you expect to qualify for? You can start by estimating the market value of your home and subtracting the total of the outstanding mortgages, plus any other liens on the property. Most lenders will typically allow homeowners to borrow up to 80 percent of the home’s assessed value.

“A HELOC is typically ideal for homeowners who have built up sufficient equity in their homes and who anticipate needing a source of funds to pay for certain expenses, or in case of an emergency,” says Wong. “They may be entering phases of their life where they are incurring large expenses for tuition, remodeling, travel or medical needs. A HELOC provides one of the most cost-effective vehicles to borrow funds when you need them.

“A HELOC is one of the best ways to manage outstanding bills because you can centralize your debt into one, lower-cost payment where the interest may be tax deductible,” he says. “Simply streamline and save on your financing costs with an Equity FirstLine Plus from First Hawaiian Bank.”

To learn more about how a HELOC can help you reach your milestones, or simply manage your finances, visit any First Hawaiian Bank branch and talk to a Personal Banker.