HELOCs differ from Credit Cards because they have lower interest rates. However, they are secured by your home, which means if you fail to pay back your debt, the lender can try to foreclose on the property.

HELOCs are often used as a safety net. People get them, just in case. If you lose your job, you can use the credit line to help keep the bills paid until you find work again. If you have an emergency, you can use your credit line to pay for it. If you have sudden expenses, such as automobile repairs or medical bills, a HELOC can come in handy. Oftentimes HELOCs are also used to pay for tuition expenses or to help finance an upstart business.

A HELOC can also be used to help pay off other debts. If you have various credit cards at rates higher than the rate of a HELOC, it might make financial sense to pay off those cards with an Equity Line of Credit, consolidating them into one bill and considerably lowering your monthly payments.

By far one of the most useful reasons to get a home equity line of credit is to fund home improvement projects.  Want to redo your kitchen, paint the exterior of your home, or replace some outdated appliances?  Get a checking account and a gold card with your home equity line of credit to spend on the things you need for your home, and enjoy the tax benefits of a mortgage that other finance options don't provide.

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