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Clark Howard doesn’t mince words about home equity lines of credit.
“The banks are trying to con you into taking out these HELOCs,” he said on his podcast. “It’s a floating rate, and they set up the payments so you’re never paying off the principal, only revolving interest.” (1)
His Sept. 21 episode was titled “HELOCked Into A Debt Trap,” and it warned that lenders are aggressively pushing homeowners to tap their equity. (2) Suze Orman sounded a similar alarm on her own show about the same time: “Variable rates move. Fixed rates stay fixed.” (1)
The timing isn’t an accident. The Federal Reserve raised its benchmark rate on Sept. 16, to a range of 3.75% to 4%. (3) The average HELOC rate was 7.28% as of Sept. 23, according to Bankrate. (4)
Meanwhile, Americans are sitting on a record $18 trillion in home equity, and $11.7 trillion of it is considered tappable, according to ICE’s Mortgage Monitor. (5)
I’m a CPA, and I agree with Clark about 80% of the way. But for one group of retirees, a HELOC can make sense. Here’s where he’s right, where I’d push back, and what to do instead.
1. He’s dead right about spending equity on vacations
This was Clark at his best: “You had a blessing, all this equity, and they turn around and say, take that vacation, go spend the money.” (1)
Your home equity isn’t a bonus. For most retirees, it’s a big chunk of their net worth. The median American 65 or older had about $250,000 in home equity in 2025, according to the National Council on Aging. (6)
Borrow against it for a cruise, and you’ve turned a paid-for asset into a monthly bill secured by the roof over your head. The Consumer Financial Protection Bureau puts it plainly: If you can’t repay on schedule, you could lose your home. (7)
I used to be on the advisory board of a local Consumer Credit Counseling Service. Debt relief companies have an expression that goes like this: “Buy a blouse, lose the house.”
2. Variable rates can bite fast
Most HELOCs are tied to the prime rate, according to Bankrate. (4) When the Fed raises rates, prime usually follows, and your HELOC payment can change within a billing cycle.
Clark called that “a curse.” (1) For a retiree on a fixed income, I’d call it a budgeting problem you didn’t sign up for.
Suze’s point is the flip side: If you have a fixed-rate mortgage, the Fed’s move didn’t change your payment at all. (1) Guard that fixed rate. Don’t trade it away in a cash-out refinance unless the numbers are overwhelming.
3. Read the fine print on the “interest-only” years
Many HELOCs let you pay only interest during the draw period, which means you pay nothing toward the principal, the CFPB says. (7)
Then the draw period ends. Depending on the plan, you may have to repay the balance over a set schedule, or even pay it all at once in what’s called a balloon payment. (7)
That’s the trap Clark is describing. The payment looks small for years, and then it doesn’t.
4. Where I disagree: An unused line can be a safety net
Here’s my pushback. Plenty of retirees are house-rich and cash-poor. They own their home outright but don’t have much in the bank for a new roof, a medical bill or a furnace that quits in January.
For them, opening a HELOC and not using it can be a reasonable backstop. Many lines cost little or nothing to keep open if you never draw on them. Ask about annual fees and closing costs before you apply.
Two big caveats. First, lenders can freeze or reduce your line if your home’s value drops significantly or your finances take a turn for the worse, according to the Federal Trade Commission. (8)
So the line may vanish right when you need it. It’s a backup, not a replacement for an emergency fund.
Second, if you need a lump sum for a specific project, Clark himself favors a fixed-rate home equity loan over a floating-rate line. (1) I agree. A fixed rate means a fixed payment and a fixed payoff date.
If you go that route, shop around, because rates vary from lender to lender. Money.com's home equity table lets you compare offers from multiple lenders in one place, so you can see what you may qualify for in just a couple of minutes. Compare current home equity rates right now.
Quick aside — most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for more than 35 years. Want rock-solid advice? Sign up for the free Money Talks Newsletter. Takes 10 seconds. No fluff. No spam.
5. The tax break is narrower than people think
Here’s the CPA part. You can deduct home equity interest only to the extent the money is used to buy, build or substantially improve your home, according to the IRS. (9)
Use a HELOC to pay off credit cards or take a trip, and the interest generally isn’t deductible. The 2025 tax law made that limit permanent, according to H&R Block. (10)
And remember that most retirees take the standard deduction. If you don’t itemize, the interest deduction doesn’t help you at all.
6. If you’re 62 or older, compare a reverse mortgage
For older homeowners who need cash and don’t want a new monthly payment, a HELOC isn’t the only tool. Nearly 1.4 million older homeowners have taken out federally insured reverse mortgages since 1990, according to the National Council on Aging. (6)
If you’re 62 or older, the equity in your home could become cash you can use now. A reverse mortgage lets eligible homeowners convert part of their home equity into funds — while keeping ownership of their home, with no required monthly mortgage payment.
See how a reverse mortgage works and whether you qualify.
Know the trade-offs going in. You still owe property taxes, insurance and upkeep, fees can be high, and the loan balance grows over time, which leaves less equity for your heirs.
7. Get a second opinion before you tap the house
Borrowing against your home is one of the biggest financial decisions you’ll make in retirement. It touches your cash flow, your taxes and your estate all at once.
If you have a sizable portfolio, it’s worth running the decision past a professional who’s required to put your interests first.
SmartAsset matches you with up to three fiduciary advisors, who can spot tax savings and planning gaps you might miss, as well as solid investment advice. If you have $100,000 or more in investments, you can get matched free in minutes.
The bottom line
Clark Howard is right that banks want you to treat your house like an ATM. Don’t. Spending equity on things that don’t last is how retirees end up with a mortgage again at 70.
But I wouldn’t rule out every HELOC. An unused line, opened while you still qualify, can be a sensible backup for a house-rich, cash-poor retiree, as long as you know the lender can pull it.
The rule I’d follow: Borrow against your house only to protect it, improve it, or in an emergency. Never to decorate your lifestyle.
Your home spent decades building that equity. Make sure it’s still there when you really need it.
Sources: 1. 24/7 Wall St.; 2. Clark.com; 3. Federal Reserve; 4. Bankrate; 5. ICE Mortgage Monitor via Stacker; 6. National Council on Aging; 7. Consumer Financial Protection Bureau; 8. Federal Trade Commission; 9. IRS; 10. H&R Block
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