Home Equity Encroaches on Credit Cards

Business Week reports on the increasing tendency of consumers to tap home equity loans or lines of credit to pay off their credit card outstandings.

Growth in credit-card receivables -- what card holders owe -- has slipped to low single digits for issuers in the last couple of years, and some industry watchers think the trend is here to stay.

"The logic of borrowing at 3% to 7% on a home-equity loan compared to 13% on a credit card is too powerful to ignore," says Morgan Stanley analyst Kenneth A. Posner.

Note: Tom Brown of Bankstocks.com includes a link to Posner's report on home equity lending (done in conjunction with Betsy Graseck) in this weblog posting