Dang--credit card is creeping up--gotta go on austerity plan

talley_sue_nycMarch 11, 2005

Wish me luck. What w/ charging some kitchen appliances instead of putting them on the HELOC (needed to charge them over the phone--can't do that w/a HELOC), which led to a general inattentiveness to the total for a couple of months this spring, my credit card is running a balance again.

It shouldn't take too long to pay it down--but wish me luck!

I've considered using the HELOC to pay the card off, but am worried that will mess up the ability to deduct the interest. It's only three months' worth of payments, too--IF I zero the spending.

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cowboyind

Yes, good luck. We all need some of it from time to time.

I'm curious, though: Why would transferring your credit card balance to the HELOC cause it to not be deductible? I thought one big plus of the HELOC was that you could deduct the interest paid on it, whereas you can't deduct the interest on a credit card.

    Bookmark   March 12, 2005 at 2:43AM
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trekaren

I know our HELOC could be used to pay CC. We had to do the same thing from time to time, during our porch remodel, and it is treated the same, no matter how the money is spent.

    Bookmark   March 12, 2005 at 4:47PM
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nancyinmich

From the website IRS.GOV:
Is interest on a home equity line of credit deductible as a second mortgage?

You may deduct home equity debt interest, as an itemized deduction, if you are legally liable to pay the interest, pay the interest in the tax year, secure the debt with your home, and do not exceed certain limitations. For more information, refer to Publication 936, Home Mortgage Interest Deduction; and Tax Topic 505, Interest Expense.

References:

Publication 936, Home Mortgage Interest Deduction
Tax Topic 505, Interest Expense

AND

I took out a home equity loan to pay off personal debts. Is this interest deductible? Where do I enter this amount on my tax return?

A loan taken out for reasons other than to buy, build, or substantially improve your home, such as to pay off personal debts may qualify as home equity debt. The interest would be deducted on line 10, Form 1040, Schedule A (PDF), Itemized Deductions. The amount you can deduct as interest on home equity debt is subject to certain limitations. For more information, refer to Publication 936, Home Mortgage Interest Deduction; and Tax Topic 505, Interest Expense.

References:

Publication 936, Home Mortgage Interest Deduction
Tax Topic 505, Interest Expense

Here is a link that might be useful: Where I found the above

    Bookmark   March 12, 2005 at 5:48PM
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talley_sue_nyc

Thanks!

Somewhere I'd read that if you use your HELOC to pay something other than home improvement, you can't deduct it. But that's not what these quotes say, apparently. Good to know--thanks!

I think one other reason I hesitate is, it'll feel too much like I got a "free pass." In the past I've used savings to pay off my CC, and it just crept up.

The last time I paid it all off, I sweated over it through cash flow. It meant I had *invested* in that zero balance, and I kept it there for 3 years. And, now that it's $1,500, I'm all upset about it, because of that emotional investment.

Maybe it'll cost me more money, but it's a sort of mental trick that works.

    Bookmark   March 14, 2005 at 4:23PM
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