Use Low APR credit card to invest in CD?

Question

I have a low (not zero) APR credit card access check. I would like to use the money to deposit in a CD to earn interest. However, I have to pay the low APR credit card interest. Since I used the money as an investment, is the low APR credit card interest tax-deductible?

Answer 1

NO NO NO NO NO NO NO NO NO NO!!!!!!!!!!!!

NEVER EVER use borrowed money for stunts like this. Using a "low apr" card is for a limitred time and is NEVER tax deductable.

Answer 2

I did this once. It's risky, because the credit card rate could rise. If it's currently at lower than what a CD pays, it's quite likely that it'll rise at some point before the CD matures. "Locked rate" does NOT mean that the credit card company can't raise the rate. It means that they need to give you 30 days (?) and an option to pay off the card at the lower rate.

To answer you question, though, the interest on your credit card should be an investment expense. It'd double check with the IRS, of course, but it appears not to violate the definition, as I read it.

Answer 3

Where did you come up with this idea????

Borrowing on a credit card to make an investment is not a good one. Save some money and then use your own money to buy a CD.

The interest is not deductible, nor should it be.

Answer 4

No. Credit card interest is not tax deductible. But the interest on the CD IS taxable. That is why this scheme is a bad idea.

Answer 5

No. Careful. Most credit cards charge a higher rate for cash advances than they do for purchases of personal items.

Answer 6

it is not tax deductible. but do invest in CD or a savings account of it makes sense. I've done it!

www.letsgobble.com

Answer 7

I think not