3 cheap ways to borrow money without using a credit card now
Credit cards are becoming more expensive. Interest rates on the product were already high and, toward the end of 2024, they rose even higher. Now at an average of 23.37%, credit card interest rates are the highest they've ever been. And, unlike other products that may become cheaper as interest rate cuts are continually issued, credit cards are likely to remain expensive for the foreseeable future. This is partially why delinquencies are high now and why the average credit card user has around $8,000 in debt.
In this climate, it's understandable if borrowers are looking for other, less pricey ways to borrow money. Fortunately, there are multiple, cheaper ways to borrow and, for some, a clear pathway to borrow as much as a six-figure sum of money. Below, we'll break down three cheap ways to borrow money without using a credit card right now.
Start by seeing how low of a home equity loan rate you could lock in here.
3 cheap ways to borrow money without using a credit card
Here are three cheap ways to borrow money now without having to swipe a credit card now:
Home equity loans
The average home equity amount is about $320,000 right now. And owners can borrow it at a median interest rate of just 8.41% currently. That's almost three times cheaper than what the average borrower would pay by using a credit card. And, if the interest rate climate cools further in 2025, borrowers can always refinance their home equity loan to the new, lower rate at that point. Credit card users, however, will likely remain stuck with a much higher rate. In addition, interest on home equity loans is tax-deductible if used for eligible purposes. For all of these reasons, then, a home equity loan may be your best way to borrow money right now.
Get started with a home equity loan online now.
Home equity lines of credit (HELOCs)
HELOCs also allow homeowners to borrow from their home inexpensively, with the funds available via a revolving line of credit versus the home equity loan's single lump sum. The cheapest option on this list with a rate of just 8.36% right now, qualified borrowers would be hard-pressed to find a cheaper way to borrow a five- or six-figure sum of money in today's lending market. Plus, HELOCs also come with the same tax benefits that home equity loans do — and they have a variable interest rate that's likely to decline even further as the Fed moves to issue additional interest rate cuts later in 2025.
Personal loans
Personal loan interest rates aren't as low as they were a few years ago, but they're still competitive and more than 10 percentage points cheaper than credit cards. With an average interest rate of approximately 12% now, personal loans are a smart alternative for borrowers who don't want to get saddled with the high rates that credit cards come with while also maintaining their current home equity levels for potential use in the future. Qualified borrowers may also be able to get a rate below that median of 12%, assuming they meet lender criteria and have a high credit score.
The bottom line
Home equity loans, HELOCs and personal loans all come with interest rates that are materially lower than credit cards and, in the case of HELOCs, the inherent potential to become even cheaper as the interest rate climate cools. That said, borrowing from your home equity comes with some risks that will need to be managed before applying. But if you can circumvent those issues and avoid some easy-to-make mistakes, a home equity loan or HELOC may be the cheapest way to borrow money in 2025.
