Homeowners Are Reaching for Their Credit Cards When Disaster Strikes—and Ignoring a Vital Financial Lifeline

Being house-rich, cash-poor is the new reality for a majority of Americans, regardless of age. 

So is racking up debt. 

With gas and food prices remaining high alongside surging property taxes and home insurance, homeowners face financial pressure from every angle.

A common course of action is reaching for a credit card. Cards are easily accessible, and many cardholders view cash-back or travel rewards as an incentive to use them. 

However, using a card comes with a cost: Total U.S. credit card debt reached $1.26 trillion after increasing by $21 billion in the second quarter of this year, according to data from the Federal Reserve Bank of New York.

Overall, outstanding credit card balances sit just shy of the $1.28 trillion record set in late 2025. Meanwhile, Federal Reserve data shows the average credit card interest rate across all accounts stands at 20.94% in 2026, climbing to 22.15% for accounts actively carrying a balance. 

Relying on credit cards without paying them off immediately is a slippery slope—and for homeowners, there is an avenue often overlooked that can be far more beneficial to getting their housing bills paid.

Funding a financial emergency

"There are a lot of households who live paycheck to paycheck, and it just needs one thing to happen to them that could lead to a delinquency," New York Fed researchers noted during a recent briefing on consumer credit.

For homeowners, that "one thing" can run the gamut: a damaged roof, a busted pipe, or a fallen tree, each costing thousands of dollars to repair. 

Yet when faced with an emergency, homeowners surveyed by AmeriSave admitted they are far more likely to turn to credit cards (64%) than home equity (43%), even though 4 in 5 report having available equity.

The survey highlights a widespread squeeze: Nearly 4 in 5 homeowners (79%) report rising utility costs over the past three years, and 45% say housing costs have outpaced their income entirely. As a result, credit card debt has become a coping mechanism across all income levels. 

Roughly 23% of low-, middle-, and high-income homeowners have taken on credit card debt due to housing expenses, proving this is not solely a low-income issue, according to AmeriSave. 

Even baby boomers—who hold an estimated $18 trillion to $19 trillion in real estate wealth—reach for credit cards in emergencies 50% of the time. According to the survey, boomers are nearly twice as likely to swipe a card as they are to tap into home equity when fast funds are required.

So, why are homeowners so reluctant to leverage their most valuable asset?

Tapping into home equity

When speaking to experts, there are several reasons why homeowners don’t immediately tap into their equity, even if they have an abundance.

“When homeowners need money, they tend to think first about what is quick and easy,” explains Linda Grizely, a Certified Financial Planner and financial wellness speaker. 

“A credit card is already sitting in their wallet, while tapping into home equity can feel much more complicated. In an emergency, people naturally gravitate toward the seemingly easiest option.”

Beyond the perception that equity products are complex, Grizely points out that homeowners tend to think of their equity differently than other debt. 

“People tend to mentally account for their home equity differently than other money,” she says. “They like knowing that equity is there and may think of it as savings, security, or money they simply shouldn't touch.”

While hesitation about taking on debt secured by a home is valid, avoiding equity altogether can backfire.

 “Hesitation isn't necessarily a bad thing,” Grizely adds. “The problem is when someone is so focused on preserving their home equity that they end up carrying much more expensive credit-card debt without seeing the bigger picture.”

That bigger picture comes down to interest rates.

As Grizely notes, the rate differential between a home equity line of credit (HELOC) and a credit card is vast.

“HELOC rates are currently averaging around 7%, while credit card rates are generally 20% or higher,” she says.

Paying off a credit card within the same billing cycle avoids interest entirely, but relying on that outcome is risky.

“Life happens, and a balance you expected to carry for a month or two can stick around much longer,” says Grizely. “At a 20%-plus interest rate, that gets expensive very quickly.”

Despite widespread reliance on credit cards, some homeowners are shifting toward home equity.

Property owners tapped an estimated $47 billion in equity during the first quarter of 2026—the highest first-quarter withdrawal figure since 2021, according to the June 2026 ICE Mortgage Monitor. Concurrently, national HELOC balances grew by $13 billion during the second quarter of 2026, marking 17 consecutive quarters of HELOC growth, according to the New York Fed.

Choosing between credit cards and HELOCs

Deciding which financial tool to use depends on the size of the expense and repayment timeline, according to Grizely.

Property taxes have increased for nearly 3 in 4 homeowners (72%), serving as a top budget strain alongside utilities (49%), homeowners insurance (41%), and major repairs (32%), according to AmeriSave. 

For smaller, short-term expenses that can be paid off quickly, a credit card remains the practical choice.

“Ideally, you're using the card to float the expense temporarily, not carrying the balance month after month,” Grizely explains.

At the same time, not all large debts are smart to pay off with home equity either. 

“I wouldn't automatically recommend using home equity to pay off a large credit-card balance just because the interest rate is lower,” warns Grizely.

“Credit card debt is generally unsecured debt. Once you borrow against your home, you've turned that into secured debt with your home as collateral. This matters if someone later finds themselves in serious financial trouble.”

Like if you’re facing a foreclosure. 

“Unsecured credit-card debt may be treated very differently in bankruptcy than debt secured by a home. Before moving a significant amount of credit card debt onto the house, understand what you're giving up and speak with a bankruptcy attorney if necessary,” adds Grizely.