Need $30K 4 home improvement. Credit card at 5% for life or HELOC at 8.5%? I’d pay off either loan in 5 years.
I did some calculating. If I use my credit card, I would have paid $3,970 in finance charges over the term of the loan. If I use the HELOC, I would have paid $6,930 in interest over the life of the loan. Based on my tax bracket, I would gain about 25% of the HELOC interest as deductions, thus the only interest that I would have paid with the HELOC is $5,198.
Everyone keeps telling me that the HELOC is the way to go, as it is tax deductible, but I can’t seem to justify the numbers. Any suggestions out there?