Houses become ‘ATM machine’ for US citizens:Americans take advantage of rising property prices to pay off credit card bills

In US, homes are no longer just a means of living or building wealth. Amid rising credit card debt, they are becoming a kind of ‘ATM machine’. People are withdrawing increased home value, i.e., home equity, to pay off credit card bills. Some are refinancing mortgages while others are taking new loans by mortgaging their homes. This means rising property prices are now becoming a support to manage increasing expenses. 63-year-old retired school teacher Linda Borowski from Ohio is an example of this. While traveling for medical treatment, she accumulated a credit card debt of $26,000, i.e., ₹25 lakh. The monthly installment disrupted her budget. She took a loan of ₹43 lakh against her home equity. With this, she paid off the credit card debt, ordered new windows for her house, and saved some money for a trip to meet her granddaughter. Actually, the home equity accumulated in American homes has reached a record $35 trillion, which is approximately ₹3,340 lakh crore. Due to high prices and expensive mortgage rates, home buying and selling have slowed down. In such a situation, people who took home loans at around 3% a few years ago are withdrawing money from the same property instead of selling the house and taking an expensive new loan. The biggest reason for withdrawing home equity is the interest rate differential. The average rate for a 30-year fixed home loan is 6.69%, while interest on credit cards is often more than 20%. In such circumstances, families are finding it better to convert expensive card loans into cheaper home loans. On average, an American homeowner has home equity worth ₹2.9 crore. But this relief is not without risk. Withdrawing equity does not eliminate debt, it only changes its form. If the economy weakens or income decreases, the installment of the refinanced mortgage can also become burdensome. In such a situation, one may have to sell the house to repay the debt. That means today the house is a support, but tomorrow this same thing can become the biggest burden of debt. $450 Billion Withdrawn from Home Equity in America During First Quarter In the first quarter of 2026, American homeowners withdrew approximately $450 billion from home equity. This included $25 billion from loans taken by mortgaging other properties and $22 billion from cash withdrawn by refinancing existing mortgages. Cash-out refinancing increased by 18% year-over-year. During the same period, credit card debt rose by 6% to reach $1.1928 trillion. According to the Federal Reserve Bank of New York, total debt of American households in the first quarter reached $17.94 trillion, which is 3% more than a year ago. Credit card debt has grown even faster. The average debt per cardholder increased by 22.7% from 2018 to last year.