WEOKIE Federal Credit Union By WEOKIE Federal Credit Union • March 25, 2020

HELOC vs. Store Credit Card Financing

If you have a big home improvement project coming up, you’re probably trying to figure out the best way to finance it. 

In our free eGuide, “Understanding & Using a HELOC to Finance Your Next Big Project,” we talk about some of the benefits of using a Home Equity Line of Credit as a financing option. But what is a HELOC, anyway, and how do HELOCs compare to the financing you can get through a store credit card? 

What is a HELOC? 

A HELOC is a line of credit that is based on the equity that you have in your home. 

However, a HELOC is different from a home equity loan because a loan only gives you one lump sum of money. A line of credit, on the other hand, provides you access to money as you need it, up to a maximum approved amount.

You only take out as much as you need, and you take it out as you need it. This “draw period” lasts longer, which means that you don’t have to rush major projects just to get them done when you first receive the money from a loan. 

Why do people use store financing?

A lot of stores offer financing options. Big box stores have their own credit cards, which they offer to shoppers as an incentive. 

Often, these cards come with an attractive introductory offer, such as no interest for six months or the option to finance your project with no down payment. 

However, these store credit cards have some pretty significant drawbacks. A HELOC is almost always going to be a better option than a store credit card, so let’s look at the reasons why that is the case.

Store credit cards have high interest rates.

Even with a great introductory offer, store credit cards tend to have high interest rates as soon as that intro period is over. In fact, store credit cards have the highest interest rates of all other kinds of cards! The average APR for these accounts is about 25%. Yikes!

If you can get your whole project paid off in that introductory time period, then a store card might be a good option for you. But if you need more than 6, 12, or 18 months, a HELOC is going to offer you a much better interest rate. 

You can only use a store credit card at that store. 

Most home improvement projects require purchases from more than just one vendor or store. Yet funding projects through a store card means you are limited to just that store. Or you end up needing to open multiple credit cards at multiple stores, which can have a negative impact on your credit score. 

A HELOC allows you to use your funds wherever you need to. Big box stores, independent designers, highly sought after contractors, specialty stores, and much more--all of your options are available to you when you use a HELOC.

What are the other benefits of a HELOC? 

The benefits of a HELOC aren’t just limited to comparing them to a store credit card.

  1. HELOCs are completely flexible, and you can use your funds for most anything. 
  2. Getting a HELOC doesn’t take long, which means you can often get started on your project within a few weeks of starting the application process.
  3. There are things you can do to get a good interest rate on your HELOC, which is different than just accepting whatever interest rate a store credit card has.


Are you ready to finance your next big project? 

Check out our free e-guide below, “Understanding & Using a HELOC to Finance Your Next Big Project.” You can use your HELOC funds for home improvements, major renovations, going back to school, or even funding a big vacation.

Have questions? We’re waiting to hear from you. Contact us any time to set up an appointment, and we’ll compare all the financing options that are available to you through WEOKIE, including a flexible and useful HELOC. Contact us now at 405-235-3030 or 1-800-678-5363.

We look forward to talking with you soon!

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