Many Americans are feeling the pinch of higher prices: Gas prices reached an average of $4.01 per gallon at the end of March, while mortgage delinquencies jumped and student loan delinquencies remained at historic highs.
While using any emergency savings you have first is recommended, that’s not always an option. After all, 45% of Americans have less than $1,000 saved.
When you’re short on cash but still have bills due, you might have to get creative on where to find extra funds. Consider these four moves to cover your needs in a pinch.
Where to get money in a pinch
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Tap your home equity
If you own a home, you might be able to borrow against the portion you own, called your home equity.
Home equity is calculated by subtracting your mortgage balance from your home’s current market value. Even if you’ve owned your home for a brief period, there’s a good chance you have equity.
There are two ways to borrow from the value in your home: a home equity loan and a home equity line of credit (HELOC).
A home equity loan is a one-time, lump-sum loan. It can have a repayment period between five and 30 years, and a fixed interest rate that makes future payments predictable.
A HELOC is a better fit if you have large expenses that don’t have fixed costs, like a major repair or renovation. Typically, you can borrow up to 80% of your home’s value, and you need to have at least 20% equity. You’ll have up to 10 years to draw from it and up to 20 years to repay the loan.
While HELOCs tend to have some fees, the interest rates are typically lower than those of a personal loan or credit card. And, if you use the loan for home improvements, the interest can be tax-deductible.
Some of our top choices for HELOCs include Figure, since it offers easy online closings.
Figure
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Loan types
HELOC, DSCR, cash-out refinance, crypto-backed loan, small business loans
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Minimum credit score
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Maximum loan-to-value
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HELOC draw amount
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HELOC draw period
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Repayment period
10 years, 15 years, 20 years, 30 years
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Availability
Figure HELOCs are available in all states but Hawaii.
Pros
- Funding as soon as 5 days
- E-closing available
- No opening fees, prepayment fees or maintenance fees
- High LTV maximum
Cons
- Not available in all states
- Maximum draw period is five years
Available APRs range from 6.65% to 14.60%, which includes the payment of a higher origination fee in exchange for a reduced interest rate, which is not available to all applicants or in all states. The lowest APRs are only available to the most qualified applicants, depending on credit profile and the state where the property is located, and those who also select ten year loan terms; APRs will be higher for other applicants and those who select longer loan terms. Your actual rate will depend on many factors such as your credit, combined loan-to-value ratio, loan term, occupancy status, and whether you are eligible for and choose to pay a higher origination fee in exchange for a lower rate. Rates change frequently so your exact APR will depend on the date you apply. APRs for home equity lines of credit do not include costs other than interest. You will be responsible for an origination fee of up to 4.99% of your initial draw, depending on the state in which your property is located and your credit profile. You may also be responsible for paying the costs of valuation if an AVM is not available for your property ($180), or an appraisal if your loan amount exceeds $400,000 ($500-$2,000, depending on property type, property value, and state), manual notarization if your county doesn’t permit eNotary ($350), and recording fees ($0 – $315) and recording taxes, which vary by state and county ($0- $1,400 per one hundred thousand dollars borrowed). Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone.
PNC Bank makes these loans available to those with credit scores as low as 600.
PNC Bank HELOC
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Loan types
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Minimum credit score
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Maximum loan-to-value
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HELOC draw amount
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HELOC draw period
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Repayment period
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Availability
Available in all states but Alaska, Hawaii, Louisiana, Mississippi, Nevada and South Dakota
Pros
- Low credit score requirement
- Wide draw range
Cons
- Only offers HELOCs
- Not available in all states
However, you’ll need to borrow with care: Since these loans use your home as collateral, not paying could put you into foreclosure.
Get a personal loan
If you have a large, unexpected expense or need to consolidate several kinds of debt into one place, a personal loan could help.
These types of loans tend to have higher interest rates than those secured by collateral, like an auto loan or a mortgage. However, they’re cheaper than credit cards.
The average personal loan had an APR of 11.65% in November, the most recent data available, according to the Federal Reserve Board. The average credit card interest rate was 20.97% in the same period.
Personal loans are available from many lenders, including banks and credit unions. Some options, like Discover Personal Loans, can have the funds sent to you as quickly as the next business day.
No origination fees, no early payoff fees
- No origination fees, no early payoff fees
- Same-day decision (in most cases)
- Option to pay creditors directly
- 7 different payment options from mailing a check to pay by phone or app
- No autopay discount
- No cosigners or joint applications
If your credit score is less than perfect, a personal loan from Upstart could help you borrow up to $50,000 and get funded in the next business day.
Upstart offers accessible personal loans for people with fair or average credit.
- Accept applicants with low or no credit
- No early payoff fees
- Most loans funded the next business day
- High late fees
- Origination fee of 0% to 10% of the target amount
- $10 fee for paper copies of loan agreement
Sign up for a 0% APR credit card
Need to make a large purchase? Some credit cards have 0% introductory APRs that could help you spread the cost of a purchase over time.
During the introductory period, you’ll need to make at least the minimum payment on time. But, unlike other cards with an APR, no interest accrues during the intro APR period. Once the intro period ends, a standard APR applies.
- Best-in-class intro-APR offers for purchases and balance transfers
- No annual fee
- Annual statement credit
- Cell phone protection
- Rewards limited to eligible travel purchases made through the U.S. Bank Rewards Center
- No welcome bonus
- Has a foreign transaction fee
- No intro balance transfer fee
Take a loan from your 401(k)
If the above options aren’t available to you and you’ve been saving for retirement, a 401(k) loan could be a possibility during a financial hardship.
Borrowing from your 401(k) doesn’t check your credit, unlike a personal loan or credit card. It only requires you to repay your account with interest. You typically have five years to repay the loan.
However, it’s not a fit for every situation: You’ll miss out on any interest that would have accrued in the account while you’re using the money. That could mean that you end up with less money for retirement.
Unexpected circumstances could also derail your borrowing plans. If you get laid off or leave your job before you’re able to pay it back, you’ll need to pay it back immediately or face a 10% penalty and owe taxes on the funds.
And, not all plans or employers allow this strategy — you’ll need to check with your human resources department to see if this is an option for you.
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