The amount I have in RRSP savings is exactly equal to the amount I have in Home Equity Line of Credit debt (significant, but aside from home mortgage, my family has no other debt).

I know if I cashed out the RRSPs, I would be taxed, but since I've just changed careers and now have a much lower income, I'm tempted to cash in my RRSPs to cover the bulk of my HELOC so it's no longer looming over me. Otherwise, it might take me forever to repay it.

3 Answers 3


Nope, don't do it. Basic math shows this...as you pay down your HELOC, you will pay less and less interest, eventually you will have it paid off. Look at what your RRSP will be worth even using a low rate of return over the next 20 or 30 years. It will likely show that it would really cost you a LOT more if you cashed in.

  • I had a funny feeling the answer would be no, but I wanted an expert to tell me. Thanks for being a great voice of reason.
    – Nat_Rea
    Dec 20, 2009 at 5:00

Absolutely not! In addition to what the person before me said, which is correct, you will also pay tax on anything that you take out of your RRSP...it will be added to your income...don't do it!

  • Hi Joanna! Thanks very much for weighing in on this question. I suppose I am better off to just figure out a plan to repay it, as best I can.
    – Nat_Rea
    Dec 20, 2009 at 5:01

Use your line of credit (LOC) to purchase more investments (non RRSP). That way, all of your LOC interest use to purchase those investments becomes tax deductible. Then use the money from your tax return to pay down the LOC.

  • 3
    Hi BC. Welcome to the site! While it's true that interest on funds borrowed to purchase investments can be tax deductible, the original poster is interested in getting out of debt, as opposed to going deeper into debt. Feb 13, 2010 at 18:39

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