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      For Your Life January 28, 2026

      How a HELOC Can Help You Pay Off Your Post-Holiday Debt

      Tapping into your home equity can help you achieve your debt management goals.

      Key Takeaways:

      • A Home Equity Line of Credit* (HELOC) allows homeowners to borrow against their home’s equity and potentially replace high-interest debt, like credit cards, with a lower-interest line of credit.
      • HELOCs offer flexible borrowing during a draw period, followed by structured repayment, making them a useful tool for disciplined borrowers planning to stay in their homes.
      • While a HELOC can save money on interest and accelerate debt payoff, it comes with risks since it’s secured by your home—making responsible budgeting and repayment essential.

      The holidays have always been expensive. But in this economy, a debt hangover can feel almost inevitable. The average American household spends over $1,000 on the holidays, according to Gallup — and if you’re travelling for the holidays or hosting holiday parties with all the trimmings, it’s easy for your costs to soar even higher.

      So, if you’re struggling with consumer debt after the festivities, you’re far from alone. And, thankfully, you’ve got options to help you manage high-interest debts and keep your financial goals on track. Here, we’ll discuss how you can leverage the equity in your home to help you pay off debt faster, how to decide if using home equity is the right decision for you, and how to apply for a Home Equity Line of Credit, or HELOC, when you need one. 

      Tapping into Your Home Equity with a HELOC

      Building up equity in your home builds your wealth — and it can also allow you to borrow against that equity to achieve your goals. One of the most common ways to do that is with a HELOC: A line of credit secured by your home.

      How a HELOC Works

      A HELOC is a line or credit that allows you to borrow up to the credit limit on the account. It’s a revolving form of credit: That means you can borrow, repay and re-borrow from the line of credit for as long as it’s open. Along the way, you’ll pay interest on the amount you borrow, rather than the total credit limit on the account. 

      • Example: You have a $40,000 HELOC, with a balance of $5,000. In this case, you’ll only pay interest on the $5,000 you’ve borrowed. 

      During the draw period, which typically lasts about 10 to 15 years, you can withdraw money from the HELOC to reach your goals. At the end of the draw period, you’ll enter the repayment period. The balance on the HELOC will convert to a loan, which you’ll repay with regular payments, such as a monthly debt payment. 

      • Example: Your HELOC has a balance of $7,500 when you enter the repayment period. That $7,500 is converted to a loan, which you repay with monthly, biweekly or weekly payments. 

      Why Use a HELOC to Pay Off Debt?

      A HELOC offers significant advantages when you’re trying to pay down debt. The primary perk is its relatively low interest rate: Because the line of credit is secured by your home, you can often access credit at a lower interest rate than you’d get with a credit card or personal loan. 

      Paying off high-interest debt with a HELOC: How it works

      Step 1: Open a HELOC

      Step 2: Use money from the HELOC to pay off your credit cards or other high-interest debts.

      Step 3: Make regular contributions to the HELOC to pay down your total debt.

      As a result, when you use the funds in your HELOC to pay off your credit card or other high-interest debts, you’ll typically pay less monthly interest due to the lower rate on the line of credit.

      Saving money on interest gives you the option to reduce your monthly payment while still paying down your debt. Or alternatively, it allows you to keep your monthly payment the same but pay down your debt faster. In the example above, the borrower could use the $83.18 they saved on interest to pay down the balance on the line of credit to accelerate their journey to living debt-free. 

      Is a HELOC Ever Not a Good Idea for Debt Repayment?

      As with any financial decision, it’s important to understand the potential risks, as well as the advantages. One potential risk of a HELOC is that it’s secured by your home. That means that if you don’t keep the account in good standing by making your interest payments on time (and making your regular payments during the repayment period), the bank could foreclose on or repossess your home. 

      It’s also important to understand that a HELOC helps you convert high-interest debt into lower-interest debt — but doesn’t mean your debt goes away. It’s important to stick to a repayment plan to pay down the balance of your HELOC and manage your debt responsibly, as well as spend within your means to avoid re-accumulating a balance on your credit cards or other high-interest credit accounts. 

      Finally, tapping into your home equity might make you more sensitive to fluctuations in the housing market, which may require consideration if you plan to sell your home soon. For example, if you’ve maxed out your HELOC and the housing market takes a downturn, you may risk owing more (across your mortgage and HELOC) than your home is currently worth. 

      Deciding Whether a HELOC is the Right Fit for You

      Opening a HELOC may be a good idea if you…

      • Occasionally need help managing high-interest debts. Since converting high-interest debts with a lower-interest HELOC helps you save money on interest.

      • Generally stick to your budget. Regularly spending within your means is a good sign that you’re likely to be able to manage your HELOC responsibly. 

      • Are planning to stay in your home for the near future. If you’re planning to sell your home soon, talk to your bank about whether a HELOC is a good idea for your situation. 

        It may also be a good idea if you’re…

      • Planning a home renovation or upgrade. A HELOC can be a helpful source of funds to reinvest in your home and potentially increase its value. 

      • Looking for a cash buffer to augment your emergency fund. You don’t need to open a HELOC with a specific goal in mind. A line of credit can offer peace of mind, knowing you have access to extra funds if you need them.  

      How to Open a HELOC

      It’s easy to start your journey to unlock your home equity.

      1. Estimate Your Borrowing Capacity

      Use our calculator to estimate how big of a line of credit you may be able to obtain, based on your home’s value and the amount of equity in your home. 

      2. Make an Optional Branch Appointment

      A branch associate can help you decide if a HELOC makes sense for you, as well as share benefits and considerations tailored to your individual financial situation. 

      3. Apply Online

      Ready to move forward? Our online application allows you to apply for a HELOC in just 3 steps. You’ll just need to answer a few questions about your home and the line you want and provide your contact information and a bit more information about yourself. From there, your application is underway — and we’ll follow up in a few days to discuss next steps.

      When you’re ready, we’re here to help you leverage your home equity to pay off high-interest debts and reach your other financial goals. 

      Set up a branch visit by finding a branch near you, or learn more about a HELOC today. 



      *All loans are subject to credit review and approval. Property insurance required for all loans secured by real estate. Rates are subject to change daily. Contact your Old National Banker or Residential Lender for current loan rates. NMLS #459308. Other restrictions may apply, see bank for details. 

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