N.J. The consulting firm produced the 1990s card and equity loan balance statistics. The outstandings are not growing in the same extent largely because they are going out the door to home equity and mortgage lenders. That has the potential to make life easier for a lot of people. Consumers can deduct the taxes on home equity loan interest, with certain restrictions, and they pay much lower interest rates. That compared with an average fixed rate of 13.29 percent for standard credit cards.
People use cards more heavily and in more places.
Brittain's firm, for one, surveyed more than 6,000 households about their spending and credit habits during a recent study. Researchers found that only 30 percent of the borrowers who used equity loans to retire card balances remained without any 11 months later. We are consumers, not particularly good savers. People have also wiped out some of the benefit that lower equity loan rates provide by applying for larger credit lines and spending more on them. Secondly, we know families are just burdened with consumer debt and, from a cash flow standpoint, if I transfer my unsecured debt to my home, I can improve my cash flow substantially by spreading that over 15 or 20 years or whatever the lender will allow me to do.