Debt Consolidation Loan vs. HELOC: Which Should You Choose?

A debt consolidation loan is a type of personal loan that allows you to combine multiple high-interest debts, such as credit cards or other personal loans, into one fixed monthly payment.

Because these loans are typically unsecured, you don’t need to pledge collateral, like your home or savings account, and you can usually collect the funds fairly quickly.

A HELOC, on the other hand, is a revolving line of credit that lets you borrow against the equity in your home.

While HELOCs can offer flexibility in how and when you use the funds, they’re secured by your property, which means your home is at risk if you can’t keep up with payments. Interest rates are usually variable, so monthly costs can fluctuate over time.

The table below shows the key differences between a debt consolidation loan and a HELOC.

For borrowers earning well over six figures, debt often looks different than it does for the average household: larger balances, more competing priorities, and a greater need for tools that offer flexibility without sacrificing control.

Debt consolidation addresses all of those dynamics at once, and for high earners specifically, the benefits go well beyond just simplifying payments.

Income is high, but liquidity is low

Even if you’re a high earner, you may still struggle with low liquidity. This may be because you have high monthly expenses due to a large mortgage, business startup costs, and/or funding your child’s tuition. You might also carry a substantial amount of student loan or credit card debt.

Here’s the good news: Through debt consolidation, you can simplify your finances, lower your monthly payments, and reduce interest charges. You may also increase your cash flow without sacrificing your liquidity.

Consolidate high-interest debt

Credit card APRs average around 21%, according to the Federal Reserve. When you're carrying a substantial balance, that interest can add up to thousands of dollars a year, even if you're making steady payments.

A debt consolidation loan lets you replace those high-interest balances with a single loan at a typically lower fixed rate. Instead of watching most of your payments get absorbed by interest, more of each dollar goes toward the actual principal. That means you pay off the debt faster and pay less over the life of the loan.

Maintain your household without losing financial ground

High earners often have fixed obligations that can't easily be adjusted, whether that's a mortgage, tuition, or expenses that support their family and career. More often, they're navigating several of these demands as part of the Sandwich Generation.

By rolling multiple debts into one lower monthly payment, consolidation frees up cash flow month to month. You get room to keep saving for the future, and cover everyday expenses without draining your reserves or liquidating assets you'd rather leave untouched.

Simplify complex finances

For high earners juggling multiple credit cards, personal loans, and business obligations, keeping track of due dates and balances eats up mental bandwidth. Consolidating those debts into a single loan removes that layer of complexity—one payment, one due date, and one fixed rate to manage.

That kind of simplification is especially valuable for professionals with variable income like bonuses, distributions, or self-employment earnings, where fixed obligations need to be as predictable as possible.

Improve your credit profile

Paying off multiple credit card balances with a consolidation loan drops your credit utilization sharply, which is one of the biggest factors in your credit score. Most BHG borrowers see a 40+ point increase in their credit score within a few months after consolidating personal debt.*

For high earners planning to take out a mortgage, refinance, or apply for other financing soon, that improvement can translate directly into better rates and terms.

While a HELOC has its benefits, it’s not ideal for debt consolidation, especially if you can qualify for a debt consolidation loan with a low interest rate and favorable terms.

Here’s why:

You’re putting your home on the line

When you use a HELOC for debt consolidation, your home serves as collateral. If things don’t go as planned and you fail to make your monthly payments, the consequences go beyond a lower credit score—the lender may foreclose on your property.

This risk can be especially concerning for high-income borrowers whose income fluctuates due to business ownership, self-employment, or commission-based structures.

Variable rates = unstable payments

Another drawback of a HELOC is that its variable interest rate is tied to the prime rate, which can shift substantially and often unpredictably. Between early 2022 and mid-2023 alone, the prime rate jumped from around 3.25% to 8.5%, before eventually going back down to 6.75% as of August 2026.

With the Federal Reserve continuing to adjust rates in response to economic conditions, there's no way to predict where your payment will land a year or two down the road, which makes long-term budgeting difficult—especially if you're trying to pay down debt on a set timeline.

Approval can be slow and documentation-heavy

HELOCs typically require property appraisals and extensive underwriting. This process can take weeks, making HELOCs less ideal when you need fast access to funds or immediate debt relief.

Plus, you may owe origination fees, appraisal fees, and other closing costs, which can increase your total cost of borrowing.

Fortunately, debt consolidation loans make it easier, faster, and more affordable to consolidate your high-interest debt.

Here’s why many six-figure earners are leveraging them to improve their finances:

Simplicity and speed

Debt consolidation loans, like those offered through BHG Financial, are quick and easy to obtain. You may get approved in as little as 24 hours², and funds can be disbursed in as few as five days.² 

Most importantly, debt consolidation loans come with fixed rates that allow for more effective budgeting, preventing unwanted financial surprises and unnecessary stress.

No collateral, no problem

These loans are unsecured, so there’s no risk of losing your home or business assets. This makes them particularly attractive to professionals with significant non-liquid net worth.

BHG understands that high earners tend to have complex finances. That’s why they consider your unique income structure and financial situation, and tailor their solutions to your needs.

Used strategically by high earners

High-income households are increasingly turning to personal loans to simplify finances and reclaim cash flow. For many, debt consolidation loans provide a strategic way to reduce complexity while keeping payments predictable.

If you’re unsure of whether you’d be better off with a debt consolidation loan or a HELOC, the table below is intended to steer you in the right direction. A loan is the ideal move if you hope to pay off high-interest credit card debts, prefer predictable monthly payments you can plan for in advance and want to access the funds quickly without putting your home on the line.

HELOCs and personal loans can be used to consolidate your debt, and choosing between a HELOC and a personal loan for debt consolidation is a choice about how much uncertainty you’re willing to accept. And if you have high-interest credit card balances, you likely want a clear plan, not more variables to track.

With a HELOC, repayment is tied to your home and to the market, and its variable rate means your payment can rise even after you have reduced your balance. Since your house secures the line, a change in income or home value can put more than your credit score at risk.

A debt consolidation loan through BHG Financial offers fixed terms and doesn’t require any collateral. Instead of a revolving line tied to your home, you receive the full loan amount, up to $250,000¹, in one lump sum. The interest rate is fixed for the life of the loan, so the payment you start with is the payment you finish with.

With BHG Financial, you can choose a term from two to 10 years^1,3, and you’ll know your exact payoff date from day one. There is no prepayment penalty, and there is no application fee to see your personalized rate through a soft credit pull that does not affect your score.⁴

A HELOC requires managing ongoing uncertainty, while a BHG Financial loan gives you a fixed payment and a fixed payoff date. When you apply, you can get a decision in as little as 24 hours² and receive funds in as few as five days², turning multiple high-interest balances into one predictable monthly payment you can plan around.