U.S. homeowners are overpaying interest on loans despite cheaper options being available, according to digital home equity lender Figure Technologies.
The fintech home equity company said reliance on credit card debt and personal loans is making it more expensive to borrow compared to other means such as using home equity as a guarantee for a secured home loan.
The interest rate on a home equity loan is much lower than that on credit cards and other consumer loans.
Built on the blockchain, Figure Technologies makes money in debt consolidation. The company found that more than 16.3 million homeowners in the U.S. are paying about $6,225 more on interest payments than they should.
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“Currently, borrowers are paying the highest interest on credit card balances of any time in the last 24 years,” said John Sweeney, head of wealth and asset management at Figure Technologies, in a statement.
“Refinancing expensive debt using home equity may be the easiest way for a homeowner to save thousands of dollars.”
In Figure’s calculations, homeowners paying 8 percent interest on a home equity line and who have enough home equity to refinance $12,549 in high-interest debt could get out of debt at least two-and-a-half years faster.
