Crypto loans vs HELOCs vs credit cards: what each costs and what each risks

A crypto-backed loan puts cryptocurrency at risk: if its price falls, the loan-to-value ratio (LTV) rises, which can trigger a margin call or liquidation. A home equity line of credit (opens in a new tab) (HELOC) is secured by the home, usually carries a variable rate tied to an index such as prime, and can put the home at risk if payments are missed. A credit card is generally unsecured, but a carried balance can bring a high APR, fees, collections activity and credit damage. The rates attached to each product are different kinds of figures, so they only line up when the same type is compared with the same type, on the same date.

How does each product work?

The three products raise cash in different ways, and each one defines "what you owe" and "what you can lose" differently.

With a crypto-backed loan, the borrower pledges cryptocurrency and receives cash or a stablecoin. The loan amount is compared with the collateral's market value, and that ratio is the LTV. Arch's loan terms (opens in a new tab) give a Bitcoin starting LTV of 60%, a margin call at 70% and partial liquidation at 80%. Ledn's loans carry a typical initial LTV of 50%, a standard 12-month term and automatic liquidation at or above 80% LTV (opens in a new tab). If the collateral falls while the balance stays the same, LTV rises, which is why a price decline is the central risk of this product.

A HELOC is revolving credit secured by the borrower's dwelling. The borrower can draw repeatedly during a draw period, then enters a repayment period. Most HELOCs carry variable rates, payments can change, and a lender can freeze or reduce a line (opens in a new tab) in some circumstances, such as a significant fall in the home's value or a change in the borrower's finances.

A credit card is revolving credit with no pledged asset. On a carried balance, interest builds daily and paying only the minimum does not stop it from accruing (opens in a new tab), and cash advances can carry a separate APR and fee and often do not receive the purchase grace period.

What does each product cost today?

Each of the figures below is a different type, and the table names the type, the date and what the figure leaves out.

Three cautions apply to reading across that table. First, the credit-card figures are Federal Reserve G.19 (opens in a new tab) averages: "all accounts" is the stated APR averaged across accounts at reporting banks, while "accounts assessed interest" is the annualized finance-charge ratio for accounts that were charged interest. Second, Bankrate's HELOC survey (opens in a new tab) covers the 10 largest banks and thrifts in 10 large US markets, and its figure is an interest rate, not an APR. Third, the Arch rate and APR table (opens in a new tab) shows how the two measures differ: a 9.00% interest rate with a 1.49% origination fee becomes a 10.49% APR for the stated repayment structure, so an interest rate and an APR cannot be set side by side.

Ledn's tiered rates (opens in a new tab) and the Unchained loan calculator (opens in a new tab) use their own structures too. Because the figure types, loan sizes, terms and fees differ, a lower or higher product cannot be named from these numbers alone. A headline rate or APR also leaves out liquidation losses, price risk, foreclosure risk, credit damage and tax effects.

What does a $100,000 balance cost per month?

A short example shows how the arithmetic works. The assumptions are illustrative only and are not a quote or a promised outcome. Suppose a borrower carries $100,000 for one month, interest only, at the published rates above.

At the Bankrate HELOC average of 7.29%, monthly interest is about $607.50. At 21.00%, the G.19 all-accounts credit-card APR, it is about $1,750. At Arch's 9.00% interest rate for loans under $250,000, it is about $750, plus a one-time origination fee of 1.49%, or $1,490.

These results mix a modeled-borrower average, a national APR average and one lender's advertised tier, and Bankrate's survey models a $30,000 line rather than $100,000. They also leave out HELOC closing costs, the higher HELOC payments that can start when the repayment period begins, card fees, and crypto liquidation and tax effects. The example shows how a rate turns into a monthly amount; it does not rank the products.

What fees change the comparison?

A rate is only part of the cost, and the fee list differs for each product.

A HELOC lender may impose these charges (opens in a new tab): application, origination, appraisal, title and other closing costs, inactivity fees, annual or membership fees, cancellation or early-closure fees (commonly in the first two or three years), and a conversion fee if variable-rate debt is converted to a fixed rate. Some plans also require a minimum draw, a minimum balance outstanding or an initial draw at opening. The CFPB's $300 minimum draw is an example, not a national requirement.

Crypto lenders publish different charges. Arch's charges include origination fees by loan size and a typical 2% partial liquidation fee, to the extent state law allows. Ledn's include a 0.50% trade spread at liquidation and a 2% administration fee where applicable (its Help Center excludes US and Canadian clients), with no early-repayment penalty. Coinbase's USDC product adds an ongoing Coinbase interest fee and a one-time processing fee added to principal.

For credit cards, the CFPB's credit card page (opens in a new tab) points to the APRs for purchases, balance transfers and cash advances, and to annual, late, cash-advance, balance-transfer, foreign-transaction and returned-payment fees.

What happens if the borrower cannot pay?

The consequence of missed payments is where the three products diverge most.

On a crypto-backed loan, the lender can respond to a falling price or a missed obligation with a margin call and, if the borrower does not act, liquidation. Arch's margin call comes with a 24-hour cure period (opens in a new tab), and its cure options (opens in a new tab) cover how thresholds work. Ledn's liquidation is automatic at or above 80% LTV. Selling collateral can also have tax consequences, covered below.

On a HELOC, the home secures the line, so falling behind can lead to foreclosure. On a credit card, a missed payment can mean a late fee, interest, loss of a promotional rate, credit reporting, collections and possible legal action, although no home or crypto is pledged.

What happens when values or rates move?

Each product reacts to a different market. A Bitcoin price decline raises LTV on a crypto loan. A HELOC's rate is usually an index plus a margin, so when the index is prime (opens in a new tab), a change in prime generally moves the HELOC rate according to the agreement, subject to the margin, floor, ceiling, introductory rate and adjustment rules. The Federal Reserve does not set a consumer's HELOC rate directly. Card APRs may be fixed or variable, and for variable cards the APR is commonly tied to an index; under CFPB guidance, issuers generally must give advance notice of significant term changes (opens in a new tab), with exceptions.

Pricing structures differ among crypto lenders. Arch's rates are fixed for the loan term. Ledn's APR comes in tiers by loan amount. Coinbase's Morpho-based USDC loans (opens in a new tab) use a variable rate based on supply and demand, plus an ongoing Coinbase interest fee.

HELOC payments can also rise when the draw period ends and repayment starts, and the maximum payment, possible balloon payments and the end of the draw period are among the terms to ask about in the CFPB's HELOC brochure (opens in a new tab).

Do credit checks and income verification apply?

The answer depends on the product, and "no credit check" is not the same as "no review."

A HELOC normally involves an application, a property valuation or appraisal, title review, credit underwriting, an income or ability-to-repay review, disclosures and account opening. A new credit card requires an application and issuer underwriting.

Ledn does not use a traditional credit check but does require identity verification and location eligibility. Coinbase's USDC product has no credit check, while access depends on customer verification, location, collateral, protocol and account eligibility. Crypto lenders' agreements also address custody, reposting of collateral and what happens if the lender or protocol fails, so those are questions for the lender in writing.

How fast can funds arrive?

Timing depends on verification, collateral transfer, jurisdiction and payout route. Ledn's median funding estimate is about 3.8 hours, which is an estimate, not a guarantee. Arch's terms set configuration and collateral thresholds but give no universal funding time.

A HELOC has no single national timeline, so the lender can provide an expected schedule and a documentation list. An existing credit card gives access up to its available credit right away, subject to issuer controls.

What federal consumer protections apply?

For HELOCs, 12 CFR 1026.40 (opens in a new tab) requires disclosures for open-end credit plans secured by a dwelling, covering the APR, variable-rate terms, payment terms, fees and minimum draws, and 15 USC 1637a (opens in a new tab) sets the statutory disclosure requirements. For credit cards, Regulation Z (opens in a new tab) covers account-opening disclosures (12 CFR 1026.6 (opens in a new tab)), periodic statements (12 CFR 1026.7 (opens in a new tab)), payment allocation, change-in-terms rules and billing-error rights, and the CARD Act amended the Truth in Lending Act on top of that.

Crypto-backed loans may not receive the HELOC-specific protections in 12 CFR 1026.40, because that section applies to credit secured by a consumer's dwelling. Whether the Truth in Lending Act and Regulation Z cover a particular crypto loan depends on the product's legal structure, the creditor's status and whether the credit is for consumer purposes, so the loan agreement and a lawyer or the CFPB are the places to confirm it. A provider's statement that it runs no traditional credit check does not settle which consumer-protection laws apply.

How does interest affect taxes?

The IRS treats the three differently, and use of proceeds drives much of it.

For tax years after 2017, interest on a home equity loan or HELOC secured by a main or second home may be deductible (opens in a new tab) when the funds are used to buy, build or substantially improve the home securing the debt, subject to dollar limits and other requirements. Interest on debt used for personal expenses, including paying off credit-card debt, is not deductible as qualified residence interest.

Personal credit-card interest is generally personal interest under IRC section 163(h) (opens in a new tab) and is generally not deductible, although different rules can apply when debt is properly allocable to a business or qualifying investment activity. The IRS explanation of personal interest (opens in a new tab) sits in Internal Revenue Bulletin 2026-05.

For crypto-backed loans, deductibility depends on the use of proceeds and the category of interest, such as business or investment interest, with its own limits. Borrowing may be treated differently from selling, but liquidation, repayment with crypto or other transfers of the collateral can have tax consequences. Keeping records of proceeds, interest, collateral transactions and any liquidation gives a tax professional what is needed to answer for a specific situation.

What should a borrower ask before signing?

A written list keeps the comparison on the same terms for every product. These questions come from the CFPB's HELOC brochure (opens in a new tab), the CFPB's credit card guidance and the crypto lenders' own terms.

1. What amount is needed, and on what date will it be repaid?
2. What is pledged or exposed: crypto, the home, or nothing beyond credit standing?
3. What are the interest rate, the full APR, the term and every fee?
4. Is the rate fixed or variable, and what are the index, margin, cap and floor?
5. What credit, income, identity, collateral and state-eligibility requirements apply?
6. What can delay funding, and how quickly can money arrive?
7. What are the margin-call, liquidation, foreclosure, collections and credit-reporting rules?
8. Who holds any crypto collateral, and may it be reposted or rehypothecated?
9. What happens at maturity, renewal, refinance or early closure, and what happens if the lender fails?
10. What records are needed for tax review?

A mortgage professional, a consumer-credit counselor, a tax professional or an attorney can answer the parts of this list that depend on a specific loan agreement or situation.

Frequently asked questions

These answers add detail on points readers often ask about next.

Are crypto-backed loans a good idea?

That depends on the borrower's goal, the loan terms and how much price movement the collateral can absorb. A crypto-backed loan keeps exposure to the collateral's price, which can help or hurt, and a decline can raise the LTV to a margin-call or liquidation level set in the loan agreement.

Is there a better option than a HELOC?

"Better" depends on what the borrower is willing to put at stake, the amount, the timeline and the cost. A HELOC risks the home and usually has a variable rate, a crypto-backed loan risks the collateral, and a card is unsecured but generally has a higher APR, so each option trades one risk for another.

Can a lender freeze a HELOC?

Under CFPB guidance, a lender may freeze or reduce a line in some circumstances, such as a significant fall in the home's value or a change in the borrower's financial situation. The line's agreement spells out when that can happen.

Does borrowing against crypto create a tax event?

Borrowing itself may be treated differently from selling. Liquidation, repayment with crypto or other transfers of the collateral may create tax consequences, so keeping records and asking a tax professional is the supported step.

Is credit-card interest tax-deductible?

Personal credit-card interest is generally personal interest and is generally not deductible. Different rules can apply to debt properly allocable to a business or qualifying investment activity.

Where to go next

The series on borrowing against Bitcoin covers collateral, loan-to-value, liquidation, custody and tax in more depth. Start with the Bitcoin borrowing series, then check any lender's terms with the CFPB (opens in a new tab) for consumer credit rules and the IRS (opens in a new tab) for interest and tax treatment.