CBS News
3 times a home equity loan is better than a credit card
When it comes to financial products and services, timing is everything.
For example, those who locked in an ultra-low mortgage interest rate in 2020 and 2021 have saved significantly more than homebuyers who acted in the last two years. Meanwhile, savers earned exponentially more interest with certificates of deposit (CD) and high-yield savings accounts opened in 2023 and 2024 than they could have a few years ago. It’s vital to make the best and most informed choice at the right time. And it also means understanding when one product is better than another.
For homeowners, there are better times to use their home equity instead of their credit cards. Since their home will be the collateral in such transactions, it’s important to make an informed decision or you could risk losing your home if you can’t pay back what you’ve borrowed. But when matched against the alternatives, it becomes clear that a home equity loan is a great choice. Below, we’ll break down three times a home equity loan is better than a credit card.
Start exploring your home equity loan options here to see what rate you could qualify for.
3 times a home equity loan is better than a credit card
Here are three times homeowners may be better served using their home equity versus swiping their credit cards.
When interest rates are high
We’re still in a high-interest rate climate, even if many expect the Federal Reserve to start cutting rates this year. When the benchmark interest rate range is as high as it’s been (currently between 5.25% and 5.50%), rates on all borrowing products will rise in tandem.
But how much they actually climb will vary based on the product. So, credit cards are around 20% or higher right now, making the use of them a poor decision for most consumers. But home equity loans, even at their higher-than-usual rates, can still be secured for under 10% right now. That’s a substantial difference in rates and will help homeowners keep much more of their money intact.
See what home equity loan interest rate you could get here today.
When you want to use it for home repairs
It can be tempting to use your credit card to make major home repairs and renovations. But avoid that temptation and instead strongly consider using a home equity loan instead. Unlike credit cards (and personal loans), the interest you pay on your home equity loan can be tax-deductible if used for qualifying home repairs and renovations. This feature gives home equity loans a major edge over other borrowing products.
“Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan,” the IRS explains online. “The loan must be secured by the taxpayer’s main home or second home (qualified residence), and meet other requirements.”
When you know exactly how much you’ll need
It’s easy to get into credit card debt, especially when you don’t know exactly how much you need to borrow. But if you have an exact figure in mind, a home equity loan with its lump sum payouts may be preferable to the revolving credit line of a credit card. This will allow for more budgeting predictability since you’ll know exactly how much to pay back each month versus a credit card, in which minimum payments can and will change depending on your activity.
The bottom line
While credit cards can be a great resource for many, sometimes they’re just not as beneficial as the alternatives. And for many American homeowners, now may be one of those times. Instead, these owners should instead turn to their accumulated home equity for extra funding. By doing so they’ll secure a lower interest rate than they would have got with a credit card and, if they use it for eligible purposes, they’ll be able to deduct the interest they paid on the loan come tax season. Plus, the structure of the loan will be much easier to budget for than a credit card with adjustable payments each month. As noted, timing is everything but right now it’s generally a better time to use a home equity loan instead of a credit card.
Start exploring your home equity loan options online here and get started.
CBS News
2 soldiers killed by landmine blast in Mexico day after 2 troops killed by booby trap in same region
A blast killed two Mexican soldiers in the second deadly incident this week involving an improvised landmine in a crime-plagued western state, authorities said Wednesday.
According to the El Universal newspaper, the soldiers were trying to deactivate the device when it exploded.
The blast happened late on Tuesday in Buenavista in Michoacan, the state prosecutor’s office said.
A military source who did not want to be named said that troops were looking for similar devices believed to have been planted in the area.
On Monday, a blast caused by another improvised landmine killed two Mexican soldiers and wounded five others in the same region. Before the explosion, the soldiers had discovered the dismembered bodies of three people, officials said.
The device was suspected to have been planted by members of a local criminal group waging a turf war with a bigger drug cartel, Defense Minister Ricardo Trevilla said Tuesday.
Six other soldiers had been killed by similar improvised devices since late 2018, he said.
Mexico is plagued by widespread drug-related violence that has seen more than 450,000 people killed since the government deployed the army to combat trafficking in 2006, according to official figures.
In the only previous detailed report on cartel bomb attacks in August 2023, the defense department said at that time that a total of 42 soldiers, police and suspects were wounded by IEDs in the first seven and a half months of 2023, up from 16 in all of 2022.
Overall, 556 improvised explosive devices of all types – roadside, drone-carried and car bombs – were found in 2023, the army said in a news release last year.
CBS News
Oklahoma set to execute man who killed girl, 10, during cannibalistic fantasy
Oklahoma is preparing to execute a man who killed a 10-year-old girl in what would be the nation’s 25th and final execution of the year.
Kevin Ray Underwood is scheduled to die by lethal injection on Thursday, his 45th birthday, at the Oklahoma State Penitentiary in McAlester. Underwood, a former grocery store worker, was sentenced to die for killing Jamie Rose Bolin in 2006 as part of a cannibalistic fantasy.
Underwood admitted to luring Jamie into his apartment and beating her over the head with a cutting board before suffocating and sexually assaulting her. He told investigators that he nearly beheaded the girl in his bathtub before abandoning his plans to eat her.
Oklahoma uses a three-drug lethal injection process that begins with the sedative midazolam followed by a second drug that paralyzes the inmate to halt their breathing and a third that stops their heart.
During a hearing last week before the state’s Pardon and Parole Board, Underwood told the girl’s family he was sorry.
“I would like to apologize to the victim’s family, to my own family and to everyone in that room today that had to hear the horrible details of what I did,” Underwood said to the board via a video feed from the Oklahoma State Penitentiary.
The three board members in attendance at last week’s meeting all voted against recommending clemency.
Underwood’s attorneys had argued that he deserved to be spared from death because of his long history of abuse and serious mental health issues that included autism, obsessive-compulsive disorder, bipolar and panic disorders, post-traumatic stress disorder, schizotypal personality disorder and various deviant sexual paraphilias.
His mother, Connie Underwood, tearfully asked the board to grant her son mercy.
“I can’t imagine the heartache the family of that precious girl is living with every single day,” Connie Underwood said. “I wish we understood his pain before it led to this tragedy.”
But several members of Bolin’s family asked the board to reject Underwood’s clemency bid. The girl’s father, Curtis Bolin, was scheduled to testify to the board but became choked up as he held his head in his hand.
“I’m sorry, I can’t,” he said.
Prosecutors wrote in opposing Underwood’s clemency request that, “Whatever deviance of the mind led Underwood to abduct, beat, suffocate, sexually abuse and nearly decapitate Jamie cannot be laid at the feet of depression, anxiety or (autism).
“Underwood is dangerous because he is smart, organized and driven by deviant sexual desires rooted in the harm and abuse of others.”
In a last-minute request seeking a stay of execution from the U.S. Supreme Court, Underwood’s attorneys argued that he deserves a hearing before the full five-member parole board and that the panel violated state law and Underwood’s rights by rescheduling its hearing at the last minute after two members of the board resigned.
CBS News
Health insurers limit coverage of prosthetic limbs, questioning their medical necessity
When Michael Adams was researching health insurance options last year, he had one very specific requirement: coverage for prosthetic limbs.
Adams, 51, lost his right leg to cancer 40 years ago, and he has worn out more legs than he can count. He picked a gold plan on the Colorado health insurance marketplace that covered prosthetics, including microprocessor-controlled knees like the one he has used for many years. That function adds stability and helps prevent falls.
But when his leg needed replacing in January after about five years of everyday use, his new marketplace health plan wouldn’t authorize it. The roughly $50,000 leg with the electronically controlled knee wasn’t medically necessary, the insurer said, even though Colorado law leaves that determination up to the patient’s doctor, and his has prescribed a version of that leg for many years, starting when he had employer-sponsored coverage.
“The electronic prosthetic knee is life-changing,” said Adams, who lives in Lafayette, Colorado, with his wife and two kids. Without it, “it would be like going back to having a wooden leg like I did when I was a kid.” The microprocessor in the knee responds to different surfaces and inclines, stiffening up if it detects movement that indicates its user is falling.
People who need surgery to replace a joint typically don’t encounter similar coverage roadblocks. In 2021, 1.5 million knee or hip joint replacements were performed in United States hospitals and hospital-owned ambulatory facilities, according to the federal Agency for Healthcare Research and Quality, or AHRQ. The median price for a total hip or knee replacement without complications at top orthopedic hospitals was just over $68,000 in 2020, according to one analysis, though health plans often negotiate lower rates.
To people in the amputee community, the coverage disparity amounts to discrimination.
“Insurance covers a knee replacement if it’s covered with skin, but if it’s covered with plastic, it’s not going to cover it,” said Jeffrey Cain, a family physician and former chair of the board of the Amputee Coalition, an advocacy group. Cain wears two prosthetic legs, having lost his after an airplane accident nearly 30 years ago.
AHIP, a trade group for health plans, said health plans generally provide coverage when the prosthetic is determined to be medically necessary, such as to replace a body part or function for walking and day-to-day activity. In practice, though, prosthetic coverage by private health plans varies tremendously, said Ashlie White, chief strategy and programs officer at the Amputee Coalition. Even though coverage for basic prostheses may be included in a plan, “often insurance companies will put caps on the devices and restrictions on the types of devices approved,” White said.
That means that a patient’s costs can also fluctuate significantly, depending on that person’s coverage specifics, the plan’s restrictions and even geographic cost differences.
An estimated 2.3 million people are living with limb loss in the U.S., according to an analysis by Avalere, a health care consulting company. That number is expected to as much as double in coming years as people age and a growing number lose limbs to diabetes, trauma and other medical problems.
Fewer than half of people with limb loss have been prescribed a prosthesis, according to a report by the AHRQ. Plans may deny coverage for prosthetic limbs by claiming they aren’t medically necessary or are experimental devices, even though microprocessor-controlled knees like Adams’ have been in use for decades.
Cain was instrumental in getting passed a 2000 Colorado law that requires insurers to cover prosthetic arms and legs at parity with Medicare, which requires coverage with a 20% coinsurance payment. Since that measure was enacted, about half of states have passed “insurance fairness” laws that require prosthetic coverage on par with other covered medical services in a plan or laws that require coverage of prostheses that enable people to do sports. But these laws apply only to plans regulated by the state. Over half of people with private coverage are in plans not governed by state law.
The Medicare program’s 80% coverage of prosthetic limbs mirrors its coverage for other services. Still, an October report by the Government Accountability Office found that only 30% of beneficiaries who lost a limb in 2016 received a prosthesis in the following three years.
Cost is a factor for many people.
“No matter your coverage, most people have to pay something on that device,” White said. As a result, “many people will be on a payment plan for their device,” she said. Some may take out loans.
The federal Consumer Financial Protection Bureau has proposed a rule that would prohibit lenders from repossessing medical devices such as wheelchairs and prosthetic limbs if people can’t repay their loans.
“It is a replacement limb,” said White, whose organization has heard of several cases in which lenders have repossessed wheelchairs or prostheses. Repossession is “literally a punishment to the individual.”
Adams ultimately owed a coinsurance payment of about $4,000 for his new leg, which reflected his portion of the insurer’s negotiated rate for the knee and foot portion of the leg but did not include the costly part that fits around his stump, which didn’t need replacing. The insurer approved the prosthetic leg on appeal, claiming it had made an administrative error, Adams said.
“We’re fortunate that we’re able to afford that 20%,” said Adams, who is a self-employed leadership consultant.
Again, out-of-pocket costs – even if the patient has health insurance and a doctor’s prescription – can be cost-prohibitive because of the plan’s co-insurance requirements as well as coverage caps or other limitations.
Leah Kaplan doesn’t have that financial flexibility. Born without a left hand, she did not have a prosthetic limb until a few years ago.
Growing up, “I didn’t want more reasons to be stared at,” said Kaplan, 32, of her decision not to use a prosthesis. A few years ago, the cycling enthusiast got a prosthetic hand specially designed for use with her bike. That device was covered under the health plan she has through her county government job in Spokane, Washington, helping developmentally disabled people transition from school to work.
But when she tried to get approval for a prosthetic hand to use for everyday activities, her health plan turned her down. The myoelectric hand she requested would respond to electrical impulses in her arm that would move the hand to perform certain actions. Without insurance coverage, the hand would cost her just over $46,000, which she said she can’t afford.
Working with her doctor, she has appealed the decision to her insurer and been denied three times. Kaplan said she’s still not sure exactly what the rationale is, except that the insurer has questioned the medical necessity of the prosthetic hand. The next step is to file an appeal with an independent review organization certified by the state insurance commissioner’s office.
A prosthetic hand is not a luxury device, Kaplan said. The prosthetic clinic has ordered the hand and made the customized socket that will fit around the end of her arm. But until insurance coverage is sorted out, she can’t use it.
At this point, she feels defeated. “I’ve been waiting for this for so long,” Kaplan said.
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