Learn: SoHo Strategy: Deducting Credit Card Interes...

Learn: SoHo Strategy: Deducting Credit Card Interest

• The Basics
• Getting Approved for Credit Cards
• SoHo Strategy: Deducting Credit Card Interest
• Debt Consolidation
• Pre-approved credit cards
• Getting the Lowest APR
• Divorce and Credit
• Removing Late Payments

by Gerri Detweiler

Remember the good old days when credit card rates were all at 19.8%, but you could deduct the interest on your taxes? The good news is that there are scads more low-rate cards available today, and you may be able to deduct the interest, if you use the money you borrow in your business for legitimate business purposes. You may even be able to deduct the annual fee!

Don't get carried away, though. Just because you can deduct the interest doesn't mean it doesn't cost you anything. But it does effectively cut your interest rate. How much? According to Linda Stern in "Money-Smart Secrets for the Self-Employed" (Random House, 1997), you can save $300 a year by deducting the interest on a $5,000 loan at 12%. Hey, every bit counts!

And keep in mind that if you have a choice between non-deductible interest (charging your daughter's braces) or deductible interest (charging your new office computer), the deductible one usually wins out. Just be cautious: Credit cards often don't feel like *real* money, and it's easy to get in over your head.

About Gerri Detweiler: A consumer educator and advocate, Detweiler has been helping Americans better manage their money for more than a decade. She has written articles for publications including Woman's Day magazine and Bottom Line, and has been quoted in numerous national publications including The New York Times, USA Today, The Wall Street Journal, and The Washington Post.

Gerri is the author of "The Ultimate Credit Handbook" and a co-author of "Slash Your Debt - Save Money and Secure Your Future".