There’s a unique credit card that you might not have heard of that could be an interesting way to leverage the equity in your home to reduce your interest rates and earn rewards. The Aven Visa Credit Card is an innovative financial solution that rewards you with a lower cost of capital for having built equity in your home.
This card can be right for homeowners with some borrowing or spending needs. It isn’t for everyone, but if used correctly, it can potentially make sense for you.
What is the Aven Home Credit Card?
The Aven Home Credit Card combines a credit card and a home equity line of credit, or HELOC. It uses the equity in your home to give you a flexible credit line for purchases. Not to mention, it comes with low variable interest rates starting at 7.49%.* Plus, the card starts at a $0 fee to get the card*. That includes no origination fee, no annual fee and no appraisal, notary or prepayment penalty fees, though a county recording fee may apply.*
It is a rewards card that earns you 2% unlimited cash back on every transaction you make with the card and 7% cash back on all hotel bookings through the Aven Travel Portal.* Aven states that you’ll find all the same hotels and airlines available on other online travel agencies, including Four Seasons, Ritz-Carlton and other luxury chains.
Aven says that it approves new customers quickly with lines up to $250,000 with flexible repayment options. Borrowers can also request cash advances or balance transfers, though a 2.5% fee* on these types of transactions should factor into your decision-making.
It’s worth noting that this sort of approach to leveraging the equity in your home does have some risks and drawbacks.
The variable APR and the 2.5% fee on cash out and balance transfers* could impact your total cost of credit. Aven does offer fixed APR plans for cashouts and balance transfers as well with 5-year or 10-year term options.* HELOCs (home equity lines of credit) carry the risk of a lien on your home but lower your interest burden, whereas personal credit cards generally won’t result in foreclosure on your home if you’re unable to pay your debt but carry much higher interest rates that might result in bankruptcy. Aven is aware of people’s potential concerns about foreclosure and recently introduced a guaranteed foreclosure protection program for eligible cardholders.*
Easy application process, quick approval
Where Aven truly shines over traditional HELOC processes is the ease of applying and the time it takes to approve and open your account. Customers can get approved in as little as 15 minutes.
This card is a home equity line of credit, even if it functions similarly to a credit card. That means you’ll need to own a home and have the title in your name. You’ll also need a credit score of at least 640, a combined loan-to-value ratio of under 89% (inclusive of the Aven line), and sufficient income to repay the loan.
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The application process is highly automated. Potential borrowers can submit required paperwork online and receive a decision quickly. If approved, your line of credit will be established right away and your Aven card will arrive within seven business days.
Is Aven the right choice for you?
Before applying for the Aven Home Credit Card, it’s worth weighing the pros and cons of this versus other credit card or home equity-related options.
Pros
- Aven offers lower interest rates than unsecured credit cards, sometimes as much as 50% less.*
- You’ll earn at least 2% unlimited cash back on all credit card transactions and 7% cash back on hotels booked through Aven*, which is unique among traditional HELOC providers for line sizes up to $250,000.
- There’s no annual fee.
- The speedy online application process is quicker than other home financing options.
- Interest expenses on HELOC loans may be tax deductible, unlike credit card debt. (Each borrower should consult a tax professional to understand their individual tax circumstances.)
Cons
- A larger line of credit may lead to overspending on purchases. Aven does verify income levels to ensure borrowers can afford payments.
- Any line of credit secured by your home opens you up to the risk of foreclosure. Aven says that it works with borrowers to minimize this risk. Aven also offers optional debt protection plans in partnership with Securian Financial, at no profit to Aven, that protect enrolled borrowers for up to $50,000 of outstanding balances in the event of involuntary job loss. However, traditional personal credit cards don’t generally result in defaults on your primary home, even if you end up in a situation where you cannot keep up with the amount owed, but can lead to other challenges with higher interest rates (bankruptcy, etc.).
- There’s a 2.5% fee for cash transfer and balance transfer options*, which can add to your cost of credit in a meaningful way.
- If the value of your home falls, it’s possible that you could owe more than your home is worth. That could create problems if you try to sell your home in the future.
Bottom line
The Aven Home Credit Card represents a unique way to leverage the equity in your home to finance major purchases such as home renovations, medical, major purchases, and education expenses. With a quick and easy application process, Aven can make it easier to have a credit line available for large purchases that you want to pay for over time. And Aven’s rates can be much lower than traditional credit card rates if you intend to carry a balance.
However, there are unique risks and things to consider with a HELOC vs. a traditional credit card, so weigh the pros and cons accordingly.
It’s wise to consider whether a credit line that’s backed by the equity in your home is the right choice for your financial needs. If you determine the Aven Home Card is the right choice for you, the Aven Home Credit Card is certainly an interesting option to consider.
Learn more: Aven Home Credit Card
*For full terms and conditions, visit aven.com.
Aven cards are arranged by Aven Financial, Inc., dba “Aven” or “AvenCard” (in AR, ID, and PA). NMLS #2042345. See aven.com/licenses for state specific details. Aven reserves the right to modify or discontinue its products or offerings at any time without notice.
The Aven Visa Credit Card is issued by Coastal Community Bank, pursuant to a license from Visa U.S.A., Inc. Aven accounts are made by Coastal Community Bank, Member FDIC. Equal Housing Lender. NMLS #462289 (NMLS Consumer Access Page). For additional information or complaints to Coastal Community Bank, visit www.federalreserveconsumerhelp.gov.
