Over the past year, Americans saw inflation rates considerably lower than what we saw just a couple of years earlier. And while the inflation rate generally remains low, it saw a slight uptick in January 2025, which followed small increases in the preceding few months.

Higher prices over the past several years have been at the top of mind for most consumers and have led many to look for ways to combat inflation. A HELOC — short for home equity line of credit — is one option available. It can be particularly useful in staving off inflation in a few key situations, though it’s not the right option for every homeowner. To help you consider all of your options, we spoke to several mortgage and financial experts to get their insight on the best ways to use a HELOC to fight inflation.

Start by seeing how much equity you could borrow with a HELOC here.

3 ways to use a HELOC to help fight inflation

There are three key strategies financial experts shared to help consumers use a HELOC as a shield against inflation. Here’s what they recommended:

Consolidate high-interest credit card debt

If you have high-interest debt, like credit cards, you can combat inflation by using a HELOC to consolidate that debt. HELOCs have considerably lower interest rates than credit cards — the average credit card rate is more than 21%, while the average HELOC rate is around 8%.

“Amid this period of high inflation, many consumers are grappling with high-interest credit cards and personal loan debt,” says Kiran Kaur, the head of credit at the HELOC lender Figure. “Recent data shows concerning trends, with higher delinquency rates and more credit card holders making just minimum payments. HELOCs can be a smart choice to pay down high-interest debt because they have lower interest rates and lower monthly payments.”

Additionally, landing a lower interest rate on your debt and being able to pay it down more quickly can help free up money to devote to the rising cost of living. And if you run into a financial emergency, having a HELOC already open could help you avoid taking on additional credit card debt.

“A credit score increase could be an added bonus,” says Kaur. “Consumers who pay down their debt often see credit score increases, which could help not just fight inflation but also help improve financial health over the long run.”

Get started with a HELOC online now.

Complete home renovations

One of the most popular uses for a HELOC is home renovations, and in times of rising inflation, it may be a particularly advantageous time to use it for that purpose.

“A popular use of HELOC funds is to pay for home improvements,” says Kyle Enright, the President of Achieve Loans. “In inflation, prices for lumber, fixtures, tools and everything else involved in making home renovations (including labor costs) will go up. If you can use the funds to purchase what you need sooner than later, you may provide a buffer against inflation.”

Another thing to consider is that your interest may be tax-deductible when you use it to substantially improve your home. And unlike home equity loans, HELOCs allow you to borrow again and again, making them especially suitable for projects with an uncertain price tag.

Avoid pulling from retirement accounts

As the cost of living rises, many consumers find themselves having to pull from their savings — including from their retirement accounts — to cover the cost. A HELOC gives you the option of pulling cash from your home rather than from your hard-earned retirement savings.

“Withdrawing from retirement savings can result in penalties and disrupt long-term financial growth,” says Katie Grimes, Senior Vice President of Mortgage Lending at Cross Country Mortgage. “A HELOC offers an alternative way to access funds quickly without compromising future financial security.”

This is particularly beneficial during a bull market, when taking your money out could mean sacrificing significant gains that will be important for your future finances.

Finding the best HELOC lender

If you’re considering a HELOC to help combat inflation, make sure to shop around to find the best offer. Rates may vary considerably, so it’s worth getting quotes from several lenders. 

In addition to interest rates, make sure to compare fees across lenders. HELOCs typically require closing costs, just like mortgages do. Make sure to compare all other fees as well to determine the total cost of the HELOC.

Finally, other factors to compare across lenders include the length of the draw period, the length of the repayment period, the type of payments required during the draw period, and whether there will be a balloon payment at the end of the repayment term required to pay off the total balance.

Pros and cons of HELOCs during inflation 

HELOCs offer plenty of advantages over other lending tools, some of which are especially prevalent during times of high inflation. 

For example, HELOCs offer more flexibility than installment loans. Like a credit card, you can draw from a HELOC whenever you need it, making it well-suited to emergencies and unplanned expenses. And unlike home equity loans and personal loans, you can choose to only draw on a portion of your credit line and will only pay interest on the portion you’ve used.

The flexible payment arrangements that HELOCs offer are another major advantage.

“Many HELOCs also have interest-only payment options during the draw period, helping to keep initial payments lower,” says Sean Briscoe, the Director of Products and Payments at Alliant Credit Union. “Unlike some loans that require immediate repayment, a HELOC provides long-term borrowing flexibility while leveraging the equity in a home.”

Of course, HELOCs also come with some risks. They require you to use your home as collateral, meaning you risk losing your home if you can’t make your payments. Additionally, because they have variable interest rates, your rate and payment could increase at any time. Because of these factors, Briscoe warns against using your HELOC to rack up debt unnecessarily.

“Borrowers should avoid using a HELOC for non-essential purchases or if they lack a stable repayment plan,” says Briscoe. “HELOCs can be risky for discretionary spending or if you lack a repayment plan. If finances are already tight, taking on more debt could put your home at risk.”

The bottom line

HELOCs are among the most flexible borrowing tools on the market, allowing you to tap into your existing home equity for nearly any purpose at any time. And when used correctly, they can serve as a shield against the rising cost of living and emergency expenses. However, like other lending tools — especially secured ones — they come with risks you must consider.