Understand Your Debt. Build Your Payoff Plan.

For homeowners with equity, a cash-out refinance or home equity loan can be an effective consolidation option because secured home loan rates are typically lower than credit card rates. The trade-off is that your home becomes collateral. Compare current rates and total costs, including closing costs, before deciding.

Yes. A cash-out refinance replaces your existing mortgage with a larger loan, and you receive the difference as cash to pay off credit cards. The amount you can access depends on your home's value and how much equity you keep, which most lenders cap so you retain a meaningful equity cushion.

Most lenders want you to keep a meaningful equity cushion in your home after borrowing, commonly in the range of 15 to 20 percent. The more equity you have, the more you may be able to borrow and the better terms you may receive. Requirements vary by lender.

The debt snowball targets your smallest balance first for quick motivational wins. The debt avalanche targets your highest interest rate first to minimize total interest. Both work. Our free calculator lets you compare them using your own numbers.

Debt consolidation can be a good idea when you qualify for a meaningfully lower interest rate than your current debts and you have a plan to change the habits that created the debt. Consolidating without addressing root causes often leads to taking on new debt.

Mathematically, the debt avalanche pays off debt fastest because it minimizes total interest by attacking the highest rate first. The right pace also depends on how much extra you can put toward debt each month and which method you can stay consistent with.