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Should I roll my credit card debt into my home loan?

It is normally not a good idea to roll credit card debt into your mortgage for several reasons. Lets look at the positive reasons and negative reasons to be better able to evaluate this.

Positive Reasons To Roll Credit Card Debt Into Your Mortgage

  1. Interest may become tax deductible saving you money
  1. Your mortgage interest rate may be lower than your credit car interest rate which may save you money
  1. The monthly payment can be lower than paying for the credit card and the mortgage separately

Negative Reasons To Roll Credit Card Debt Into Your Mortgage

  1. Many people find that once they roll the debt from their credit cards into their mortgage (or into other debt options), their credit card debt goes right back up again leaving them with the higher mortgage payment and a credit card payment, making their budget even more difficult to manage than had they not rolled it.
  1. Credit card debt typically does not have a “life” as long as a mortgage. For example your credit card debt may take you three-five years to pay off. If you roll it into your mortgage you have now spread it out over a 25-30 year mortgage. When you add up the total interest you will end up paying, it is normally a lot more than had you left the debt on the card.
  1. The amount you save in taxes will normally be a lot less than the total cost of the mortgage interest debt over the 25-30 years.
  2. Learning to manage your spending is critical. If you have credit card debt it is because you are spending more than you can afford. Make a decision to not use your credit card unless it is needed for a real emergency. Taking control of your spending can do a lot more for you than rolling your debt into your mortgage.

 

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