03/14/2026
The Interest Rate Gap Most People Overlook
Right now, there’s a pretty big gap between the interest rates people pay on different types of debt.
Recent data from the Federal Reserve shows:
• Average credit card interest: ~21–22%
• Typical home equity borrowing rates: often closer to mortgage market rates
That gap matters more than most people realize.
For example, if someone carries $15,000 in credit card debt at 22%, the interest alone can be over $3,000 per year if the balance stays around that level.
Meanwhile, homeowners have something unique that renters don’t: equity.
Equity gives homeowners financial flexibility. Some people use it for renovations, some for emergencies, and others to restructure higher-interest debt into something more manageable.
Not all debt costs the same. Understanding the rate difference between types of debt can make a surprisingly big impact on long-term finances.
