The average interest rate on credit card debt is around 14 percent–and that’s 14 percent after tax, because interest on credit card balances isn’t deductible. Some cards charge even higher rates.
If you’re carrying a balance, you should pay off your credit card debt as rapidly as possible. You can use a home equity loan to pay it off, replacing credit card debt with lower-rate, tax-deductible home equity debt. Another tactic is to refinance a home mortgage for an amount greater than the old loan and use the excess proceeds to pay off your credit-card debt.
Another approach: juggle credit card solicitations. You probably get credit card offers promising you no interest or low interest rates for a few months. You can take advantage of those offers by rolling your existing credit card debt into a new credit card, at low rates. When the initial offer expires, roll to another low-rate card. Just make sure you keep paying down your debt while you’re switching among cards.
