As Credit Card Debt Mounts, Home Becomes a Piggy Bank
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- Linda Boroski, a 63-year-old retired schoolteacher in Bellevue, Ohio, took out a $45,000 home-equity loan from Rocket mortgage to pay off $26,000 in credit card debt she had run up paying for medical travel.
- U.S. homeowners have accumulated a record $35 trillion in home equity, a nest egg that many are now tapping to pay off credit card balances.
- Americans continue to spend freely, keeping the economy humming, even as credit card debt grows — with home equity becoming the financial cushion bridging the gap.
- Daryl Fairweather, chief economist at Redfin, said homeowners are pulling equity out of their homes to pay off card debt because they are "sitting on all this money."
- Boroski used the extra loan proceeds to buy new windows for her drafty 2021 Queen Anne home and kept some left over for a trip to visit her granddaughter.
Why it matters: For borrowers like Boroski, converting $26,000 in unsecured credit card debt into a $45,000 loan secured by her home trades a volatile liability for one that could cost her the house if she falls behind — and the fact that record home equity is now being used to prop up everyday spending suggests consumer purchasing power is increasingly tied to housing values rather than income.
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