A recent independent study estimates that more than four million U.S. households used home equity loans to repay all or part of their credit card debt in the last two years.

This represented a shift of $26 billion from credit card to equity debt, according to the study conducted last month by Brittain Associates Inc., Atlanta.

Brittain polled more than 6,000 U.S. households by telephone. Of those that obtained an equity loan, 70% used it to pay off all their credit card balances.

Brittain extrapolated that three million homeowners wiped out their credit card debt with the lower-interest home loans.

Eleven months later, 30% of those homeowners were still free of credit card debt.

Home equity loans are attractive because of low interest rates-typically 10.5%, versus 17% for a credit card-and because the interest is tax- deductible.

"Home equity loans are being very aggressively marketed," said Bruce Brittain, president of the research firm.

Some companies advertise that they will approve applications over the phone in minutes, without even appraising the borrower's residence.

"With the advent of 125% (loan-to-value) equity lending, there are more people borrowing more than what their house is worth," Mr. Brittain said.

Though home equity loans may be less burdensome for consumers, Mr. Brittain said, credit card issuers may lose out.

"If the issuer is not also in the equity lending business, there is no place for those shifted funds to go but to a competitor," Mr. Brittain said. "Even if you are an equity loan provider, you are going to make less money on those outstandings."

That $26 billion is still a very tiny percentage of consumer debt, said Anita Boomstein, a New York-based credit card lawyer at the firm of Hughes, Hubbard & Reed.

It would equal 6% of the $426 billion of credit card outstandings at yearend 1997, according to the Wakefield, Mass.-based research company Veribanc Inc.

Ms. Boomstein said the "key question for issuers in terms of profitability" is how many of the four million consumers usually revolve their credit card balances.

"If these people are paying off the minimum each month, from that perspective it is significant for the issuer, but overall it seems to be pretty small," she said.

Mr. Brittain disagreed. "Twenty-six billion dollars is a lot of money, even if the total outstandings are $426 billion," he said. "It doesn't take many percentage points going one way or another on a narrow-margin financial product before you begin to see some squeeze."

Another problem that issuers could face is consumers who rebuild their credit card debt after paying it off, and then face problems making repayments.

"If they get squeezed, my bet is they will pay the equity line first," Mr. Brittain said. "In the long run, it could affect credit card delinquency rates."

Warren Heller, research director of Veribanc, said a borrower's habits are more relevant than the type of loan taken. "If a family has the propensity to run up debt, they are probably headed for doom whether or not they take out a home equity loan," he said.

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