Skip to content
United Settlement
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
Professional Debt Relief Programs
Logo
United Settlement
phone icon 888-574-5454
client icon Client Log In
  • More
    • About Us
    • Reviews
    • Contact Us
    • Debt Settlement
    • Debt Consolidation
    • Debt Management
    • Business Debt Relief
    • Credit Card Debt Relief
    • Debt Relief by State
    • FAQs
    • Blog
    • Sitemap
Qualify For Debt Relief
Professional Debt Relief Programs
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
United Settlement » Credit Card Debt » Credit Card Interest – Tax Deductable?
admin June 19, 2018

Credit Card Interest – Tax Deductable?

It would be nice if we all lived in a perfect world. A lot of us spent a certain amount of time believing in the tooth fairy when we were kids. Lose a tooth, place it under the pillow, and a few bucks magically appeared the next day.

Or maybe the myth of Santa Claus applied to you as it did to many others – be good all year, make a wish list, and then Santa and his helpers would come down the chimney and give you all the gifts you wanted that year. Not a bad deal. Sooner or later, however, we all grow up, get disillusioned, and realize, unfortunately, that the tooth fairy and Santa Claus don’t exist. And that leads us to our discussion of whether we can deduct personal credit card interest expense from our personal income taxes.

Unfortunately, for the past thirty-plus years, the prospect of doing so has been about as real as the existence of the tooth fairy or Santa Claus.

Personal Credit Card Interest is not Tax Deductible

The Tax Reform Act of 1986 eliminated the opportunity for individuals to deduct credit card interest expense from personal income tax returns. The reasoning behind the change back then was that credit card spending and associated interest expense discouraged savings – and that this reduction in savings and interest income resulted in lower overall taxable personal income, thereby lowering tax revenues.

Furthermore, to allow individuals to deduct credit card interest payments from taxable income would only reduce tax revenues even further. Therefore, the IRS defined which interest expenses would be classified as personal interest expenses that would no longer be considered tax deductible on a personal tax return. These personal interest expenses include those associated with credit cards, back-taxes at the federal, state and local level, and any interest expenses associated with auto loans and unpaid utility bills.

Is Any Interest Expense Tax Deductible?

Credit Card Interest - Tax Deductable

credit-card-interest-rate

There is a silver lining. Some interest expense is tax deductible. Interest expense associated with student loans, as well as with loans borrowed to purchase investment property, is tax deductible. Furthermore, interest expense associated with home loans – including mortgages and home equity loans – is also tax deductible. Finally, interest as a business expense is tax deductible – and here is where things get interesting with credit card interest expense. If you are running a business, function as an independent contractor, or are otherwise self-employed – you can deduct credit card interest as a business expense.

Credit Card Interest as a Business Expense is Tax Deductible

For the sake of accounting clarity, it may be best to use a separate credit card for business related purchases, as in this way you can simply refer back to your monthly statements to calculate the amount of interest expense to deduct during tax season.

However, it is not necessary to have a separate credit card for business purchases – though it will be necessary to compile accurate receipts that separate your business purchases from personal purchases and the associated interest expense that you will deduct from your business tax return. Remember – personal credit card interest expense is not tax deductible.

Another Strategy - The Home Equity Loan as a Replacement

Since interest expense on home equity loans is tax deductible, if you are in the position of owning sufficient equity in your home, it can make sense to utilize the proceeds of a home equity loan to pay off your personal credit card debt. In this way, you will be replacing non-tax deductible interest expense associated with personal credit cards with tax deductible interest expense associated with a home equity loan.

Additionally, the interest rate associated with a home equity loan may in fact be lower than the interest rate attached to your credit card debt. The IRS stipulates that interest expense on home equity loans up to $100,000 is tax deductible, and places no restriction on how an individual is allowed to use proceeds from a home equity loan.

Bear in mind, however, that a home equity loan is secured by the underlying asset, so in the event of default, your dwelling serves as collateral for the loan. Nonetheless, since the interest expense associated with a home equity loan is tax deductible, this option could prove worthwhile, and it is one worth discussing with your tax professional.

Are you in debt? we can help

  • Amount
  • Contact

How much do you owe?

Excellent

Based on 356 reviews.
Overall 4.4 out of 5 stars

View All Reviews

Buddy Ewing

December 28

Time and again, I did not know how to handle my debt

Time and again, I did not know how to handle my debt. Even when I paid my credit cards off, a few months later I was back in the same situation. But this year is different. I contacted United Settlement...

Lianne Finnegan

December 27

Business debt relief is what I needed when I contacted the United Settlement crew

Business debt relief is what I needed when I contacted the United Settlement crew. They are committed to helping people like me who requires more help with business debt problems. I had several loans out...

Wren Herrera

December 26

Student loan debt was the reason that I reached out to United Settlement

Student loan debt was the reason that I reached out to United Settlement. I had about 200K plus in student loan debt for my business degree. I recognized that I had to do something when I struggled to make...

Jardel Shah

December 20

There is nothing worse than falling ill and then having to deal with super expensive medical bills

There is nothing worse than falling ill and then having to deal with super expensive medical bills that you really do not have the patience or experience to handle. I was pleased with my experience with...

Iain Holt

December 14

I took out a few personal credit cards to open my boutique

I took out a few personal credit cards to open my boutique. When than money ran out, I went on to take out more loans for my business. However, this quickly turned into a disaster. Today, I now have a mountain...

Avaya Adkins

December 12

Who knew that auto loans were so negative for your credit lines

Who knew that auto loans were so negative for your credit lines? Especially, if they are not paid off right away. As a married couple, we had vowed to keep auto loan debt at bay. But, we found ourselves...

Lucien Rojas

December 07

I didn’t have a ton of debt when I contacted United Settlement

I didn’t have a ton of debt when I contacted United Settlement, but what I wanted from them was some information about how to handle my debt management. I knew that I needed some more information to get...

Madiha Matthams

December 04

Federal student loans were the reason I ended up at United Settlement

Federal student loans were the reason I ended up at United Settlement. I had about $200K to pay back and I was not quite sure where to tackle that debt once I got out of school. But I reached out to that...

Asim Horner

December 03

Everyone knows how horrible student loans are

Everyone knows how horrible student loans are. For me and my family, they had become more than just an annoying monthly bill. They had taken over our lives. That’s why I decided to take action and find...

Frankie Mckee

December 03

I wanted to be more informed about my own personal and business debt

The number one reason I chose to contact United Settlement was I wanted to be more informed about my own personal and business debt. When you have credit card debt, it can be extremely frustrating. Especially...

Justine O'Ryan

November 29

I cannot believe I was finally able to find a company to actually help me pay off my debt

I cannot believe I was finally able to find a company to actually help me pay off my debt! I thought I would forever be chained to debt. But United Settlement offered me multiple solutions for paying off...

Jerry Conley

November 21

What your money can do for you.

The great reviews that you have thanks.

Cathal Brett

November 19

Dealing with high interest auto loan debt was difficult for me and my wife

Dealing with high interest auto loan debt was difficult for me and my wife. We thought we got a good deal, but it actually was a horrible loan. So, we reached out to United Settlement, and they got to work...

Aliesha Ward

November 12

No one really wants to go bankrupt, and neither did my family

No one really wants to go bankrupt, and neither did my family. But fortunately, we did not have to go that route. It was our last resort, but United Settlement helped us figure out a way around bankruptcy...

Filip Rosas

November 08

I had been through about 5 different credit counseling agencies before I found United Settlement

I had been through about 5 different credit counseling agencies before I found United Settlement. I had read through their reviews and made the decision to move forward with them. I also was so impressed...

Susanna Fasenmyer

November 07

Save time and money

Just what I needed, already had a company I was working with and I switched because I was able to same some money. Brian and Alfred were really nice and helpful

Warren Hutchinson

November 07

As a business facing some unwanted financial difficulties

As a business facing some unwanted financial difficulties, we were at a loss for what to do next when our debt started to soar. We took a closer look at our financial situation by contacting United Settlement....

Bobbi O'Quinn

November 02

I had no clue how to create a debt management plan

I had no clue how to create a debt management plan and in fact, I didn't even know what a debt management plan was. Fortunately, I reached out to United Settlement before I had too much debt to tackle....

Dawn Mercer

October 31

Being burdened by debt is one of the biggest struggles we faced as a family

Being burdened by debt is one of the biggest struggles we faced as a family. But these people at United Settlement were very helpful in deciphering the different debts we had and then coming up with a debt...

Forrest Guest

October 29

Student loan debt was my worst enemy before I ran into United Settlement

Student loan debt was my worst enemy before I ran into United Settlement. I really thought I would just have terrible credit for the rest of my life because I will never get out from underneath it. It was...

Related pages:

  • Credit Card Debt
  • Credit Card Relief
  • Credit Card Guide
  • Credit card interest rate charges
  • Credit and loan plans
  • How To improve Your Credit Score
  • Too much credit card debt
  • Solving Your Credit Card Debt Problem
  • Forgiveness
  • Average
  • Credit Reporting Agencies
  • Contact Us
  • 241 West 30th Street
    3rd Floor
    New York, NY 10001
  • (888)-574-5454
  • [email protected]
  • Privacy Policy
  • Terms & Conditions
  • Debt Relief Services
  • Debt Settlement
  • Business Debt Relief
  • Credit Card Help
  • Debt Consolidation
  • Debt Management
  • Student Loan Help
Learn more about debt relief


    • facebook
    • Google Plus
    • Twitter
    • YouTube
    • Instagram
    • Linkedin
    • facebook
    • Tools & Resources
    • Contact Us
    • About Us
    • Blog
    • Debt Calculator
    • Frequently Asked Questions
    • Sitemap
    • Reviews
    • Client Login
    Free Savings Estimate
    Apply Here
    Clients who stay according to debt relief program can realize approximate savings of 50% before fees, or 30% including fees, over 12 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for reasons such as: their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period. We do not assume consumer and/or business debt, provide tax, bankruptcy, accounting, legal or credit repair services/ advice. Our program is not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. If you have any additional questions please contact us.
    Copyright 2020. United Debt Settlement, LLC