A home equity line of credit (HELOC) is a great resource to have at hand. When you need money for emergencies, special events or occasions, the low interest rate and flexibility of a HELOC can’t be beat. Here are four ways to utilize a HELOC to reduce monthly bills, improve your quality of life and give yourself some peace of mind:

1. Pay off high-interest loans such as credit cards.
   HELOC Annual Percentage Rates (APR) are generally low,
   especially when compared to credit card interest rates. The average interest rate on consumer credit cards is 14.99%, but many are seeing far higher rates. Paying off the balance of credit cards can significantly reduce your monthly payments.
2. Make home improvements. Costs of labor and materials are down in this troubled economy. Making improvements now may increase the value of your home without blowing your budget.
3. Invest in education. Are you or someone in your family considering a return to school? If more education now may mean higher pay later, then tuition is definitely a smart investment.
4. Pay for major events, occasions or purchases—or the unexpected. The best way to keep spending under control is by planning, budgeting and saving for major purchases or events. But even the best-laid plans can be derailed by the unexpected, and when that happens, it’s often better to avoid reaching for that credit card. Using up too much of your available credit is one way to earn a ding to your credit score, and there’s always that high interest rate to consider. If a major event is on your horizon, consider your HELOC for handling the unexpected.

Filed under: Money management tips by Shannon