One of the most common techniques for getting cash to help with credit card debt reduction is by tapping into the equity on your home. While this may be spending some of the profit you've hoped to make on your biggest investment, your home, it may well be the best choice among several other poorer ones. There are several things to bear in mind, however, as you consider whether a home equity loan or home equity line of credit (HELOC) would be right for you. Let's look at some of those now.

First, some definitions: a home equity loan is an installment loan, just like your first mortgage or your car loan. You get a lump sum, and you pay this back according to a schedule, usually with fixed rates and payments. A HELOC on the other hand, is really more like another credit card than a home loan. You are set up with an account with a credit limit you can borrow from whenever you desire. You don't have to have the entire amount allocated and costing you interest from the beginning. Rates are variable, and usually tied to the prime rate

Typically, a home equity loan is used for things like major home improvements, or to finance unplanned for events. What is becoming more and more in vogue these days however, is the practice of tapping a home equity loan for frivolous uses, because it's easy to get, and there are no sources of other "fun" capital to play with. Not only is this dangerous to your ultimate state of wealth, but if you were to blow through this asset it may not be there when it's actually needed. Some wisdom is required in knowing just when to use this. If you're going to use this to pay down or off credit card balances, then do yourself a favor and make sure you don't repeat the disaster.

When shopping for a home equity loan or HELOC, there are some tips you'll want to remember, and the first of these is to go shopping! Don't sign the dotted line with the first lender you call, unless of course you're looking to be relieved of a lot of money! Rates will vary from company to company, and having lenders compete for your business is a good thing! Don't ever be made to feel as though they're "doing you a favor", and you won't be able to find terms as good as these elsewhere. Yes you will.

This kind of shopping is especially good for your loan when it comes to fees. Make sure the lender isn't tacking on any junk fees. If you have okay credit, you probably can get out of appraisal, application, and broker fees. Even if you don't have great credit, all this is negotiable if they want your business.

A home equity loan or line of credit can be a good vehicle for addressing credit card debt. It can turn taxable debt into tax-deductible debt, and get you a fresh start. Just be sure and count the cost before you sign away any equity!