Two Money Experts, One Message: Don’t Borrow Against Your House Right Now

Two Money Experts, One Message: Don’t Borrow Against Your House Right Now

Trey Thoelcke

Mon, September 21, 2026 at 4:35 PM GMT+3 5 min read

Quick Read

• Following the Fed's September 2026 rate hike to 4%, both Suze Orman and Clark Howard warned homeowners to avoid borrowing against their homes via HELOCs.

• Clark Howard calls HELOCs predatory because banks structure payments as revolving interest only, so balances never shrink while rates rise monthly.

• Howard's 36-month rule: use a HELOC only if you can repay within 36 months; otherwise, choose a fixed-rate home equity loan to avoid rate exposure.

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The Federal Reserve raised its benchmark rate on September 16, 2026, lifting the federal funds target upper bound from 3.75% to 4.00%. It was the first hike in years. Within roughly a day of each other, Suze Orman and Clark Howard used their podcasts to warn listeners about the same thing: do not borrow against your house right now, and if you already have, understand exactly what just happened to your payment.

This matters most for people at or near retirement who own their homes outright or close to it. That accumulated equity, sitting on top of a Case-Shiller national home price index that reached 336.7 in June 2026, is precisely why banks are marketing home equity lines of credit so aggressively. The collateral on a home equity line of credit (HELOC) is the house itself. That is the entire story.

Orman on the Mechanics of Variable Debt

On her Women & Money podcast, Orman drew the line cleanly:

Variable rates move. Fixed rates stay fixed. So if you have a fixed rate mortgage, last Wednesday's Fed decision did not suddenly change the interest rate on your existing mortgage.

The takeaway here is unambiguous. If your housing debt is fixed, the hike is not your problem. If your housing debt floats, as nearly every HELOC does, the payment on your existing balance can reset within a billing cycle. Orman went further on new borrowing:

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If the only way you can afford a home is to get an adjustable rate mortgage, in my opinion, you cannot truly afford a home at this point in time.

The same logic applies to a HELOC used to fund a lifestyle you cannot cover from cash flow.

Howard on What the Banks Are Actually Selling

Clark Howard was more blunt. On his namesake podcast, he described the product itself as predatory:

The banks are trying to con you into taking out these HELOCs. It's a floating rate, and they set up the payments so you're never paying off the principal, only revolving interest. Every time interest rates go up, they raise what you have to pay within a month. It's a curse.

His framing of the marketing pitch was sharper still:

You had a blessing, all this equity, and they turn around and say, take that vacation, go spend the money. Don't worry about it. We're going to lend you that money, and if you can't pay it, we're going to take your home from you. What a deal. Yuck.

Howard has long argued that a HELOC's floating rate structure makes it dangerous in any rising-rate environment. Holding a HELOC open longer than about 18 months in a rising-rate environment, he has said, is "really ugly for your wallet."

Debt Consolidation Trap

The most dangerous pitch is the one that sounds most reasonable: use a HELOC to pay off credit cards. The average credit card APR is 21%. A HELOC will price well below that. The math looks obvious.

The math works. The behavior undermines it, however. Howard's warning, echoed by planners for decades, is that consumers who consolidate cards into home equity almost always run the card balances back up. Now they carry both. Worse, the credit card debt was unsecured. The HELOC is secured against the house. What was a collections problem becomes a foreclosure problem. You converted a call from a card issuer into a lien on your primary residence to save a spread that evaporates the first time the cards get touched.

Howard's 36-Month Rule

The one piece of constructive guidance in either broadcast is Howard's 36-month rule. It answers the only question that matters if you have decided to borrow against your home anyway: which product?

If you can pay the balance back inside roughly 36 months, a line of credit can work, because you are exposed to the floating rate for a limited window. If the project is longer, a kitchen renovation, a multi-year addition, anything you know will take years to repay, a fixed-rate home equity loan is the safer instrument. You lock the rate at origination, and the payment does not move when the Fed does.

Home equity carries real risk. The collateral is the house. If you are considering a HELOC right now, price both products at your credit union, write out the payback window, and apply the 36-month test before signing anything.

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