Posts tagged: refinancing

Is Credit Card Interest Ever Tax Deductible

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The end of the year has passed. You have survived the holidays, and now you are ready to move on with another year. After all, time marches on. But there is one thing that you have not yet done for last year that is completely unavoidable. It is your taxes. So you are trying to think of every possible way you could get a tax deduction. Then it hits you. Hey, is it possible that your credit card interest is tax deductible?

Sorry, but no. Unfortunately, unlike the interest you pay on your mortgage, your credit card interest is not tax deductible. But there is a way you can make it tax deductible. Still, there are some risks involved. Whether or not the risk is worth it is completely up to you. For you are the one who knows your circumstances. If you really want your credit card interest to be tax deductible, here is what you do.

Refinance Your Home

Sound ridiculous? If you are doing it just to get a tax deduction on your credit card interest, it probably is. If it is that important to you though, refinancing your home can help. It is possible for you to refinance your home and transfer the balance on your credit card to your home loan. That way, you have basically paid off your credit card and do not have to pay interest on it anymore. Now, instead, you have more interest to pay on your home loan, or your mortgage. That kind of interest is in fact tax deductible. By putting all the money you owe from your credit card onto your home equity line of credit, you allow for the interest on your credit card to change to a different type of interest, making it tax deductible.

Risks

You could lose your home. It is kind of a scary statement, yes, but it is in fact true. Not necessarily just because you refinanced it to get your credit card balance transferred, but because it may take longer for you to pay off your home loan. Because it would take you longer and make your balance bigger, it may be difficult to make monthly payments in full and on time.

Whether refinancing your home to get a little extra money from your taxes is the right thing to do is up to you. In my opinion, it is definitely not the wisest thing to do. Better chances of keeping your home is way more important than getting money back from the interest you paid on your credit card. To me, the risk is just too big to take. Having a home loan is burden enough.

Credit Cards After Refinancing Student Loans

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This is a sticky process. Many have gone through a consolidation process of refinancing your student loans to try to decrease your interest on the student loans. So now you are looking for ways to improve your credit and you want to find out how to get a credit card because you have heard that a credit card is going to help you out of your financial bind. Well this can be true. There are some options that you can look at. First make sure that you are in the clear from your refinancing process so that you can apply for credit cards. Whenever you go through a refinancing, you probably can’t get a new line of credit or use the current ones you have too extensively.

One of the first steps you should take is to find out where your credit is at and what type of cards companies can offer you based on your credit, income, and any other debts you may have. It is important that no matter what happens with your credit card situation, you are able to be consistent on paying off your student loans. This is fundamental for any person looking to keep their credit. One late payment can put you in the dog house, while six solid payments in a row can begin to help your credit improve.

The Appropriate Credit Cards While Paying Off Student Loans

So when you have found out where your credit score is at and you have finished the consolidation process for your student loans then you can start looking at cards. Depending on where your credit is, you might have to start off with a secured credit card before moving forward with an unsecured credit card. This is fine because whatever type of credit card you have, you need to pay your bills on time and spend wisely with your new card.

If you are struggling to find the right card and you just want to improve your credit then you should start by opening a checking and savings account if you don’t have one and make sure to pay your normal bills on time like rent, utilities, car payments, etc. If you can do this, then this will be a good first sign for any creditor. Next you need to look at store cards as options. These are just some examples other than using the student loan itself. Don’t put yourself in a difficult situation where you are going to have to worry about consolidating your credit cards a year after doing the same with your student loans.