Suppose you owe $10,000 on your credit card with a 15% APR. You have an opportunity to refinance your home and you could pull out some equity to pay off the credit card and add the debt into the new home loan.

Assuming your new home loan has an interest rate of 4% what is your after tax savings if you pay down the $10,000 debt in your home loan?

Annual Interest paid to credit card company?

Is this interest tax deductible?

Annual Interest paid (of the $10,000) debt with the home loan?

Is this interest Tax Deductible?

What is the difference? What is your after tax savings?

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