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Home-equity credit cards are brand new on the market in 2000. For the first time, you can actually carry a credit card in your wallet that has interest rates between five and 10 percent.

What is a home equity credit card and how is it used?

Washington Mutual Bank launched its credit card, called "On the House," in April 2000. They offer homeowners a credit rate of 5.99 percent for the first six months. The limit of your credit card is whatever the value of your home is. The more your home is worth and the lower the unpaid amount on your mortgage, the higher your line of credit will be. It's feasible that you can have a line of credit of half a million dollars or more.

How did the idea come about?

It started as a result of the Tax Reform Act of 1986, a law that erases tax deductions on loans for consumer products and allowed your mortgage to be tax deductible.

Bank lenders saw these credit cards as a new opportunity for their customers. You can have a card with a lower interest rate and larger limits. Consumer groups warn customers, however, that there is a significant downside to these home-equity credit cards. If you use the card excessively, you can lose everything: your home, your retirement savings, and everything you own.

On the flip side, owning one of these cards can reduce your mortgage payments drastically and can allow those who make large purchases occasionally to charge those items on a credit card and not have to worry about the height of their limit.

Is the card a good idea?

The best thing you can do is to sit down and do some figuring. Decide whether it's affordable for you and a good deal and idea. Figure out if how high your credit line would be and whether it's truly worth your time and money to have one of these cards. For many people, in this consumer-crazy country, having an extra credit card in their pockets can be dangerous. You need to do what you feel is right for you.