March 12, 1998

Total deductibility for credit card interest! Why not?

Credit cards offer a multitude of financial opportunities. Some of these opportunities are beneficial and others are not. Credit cards allow numerous bills to be paid with a single check. However, late payments and partial payments result in interest charges. The interest on personal credit cards is not a tax deductible item and results in more out of pocket expenditures when the user cannot pay off the full balance within thirty days. Interest is charged on the unpaid balance including on any sales tax that is part of that balance. Interest on personal credit cards should be tax deductible because the spender is generating business. For example, I purchase a computer for my house with a personal credit card and pay for it over a three month period. I pay interest on the unpaid balance. Why shouldnít I be able to deduct the interest from my income? Credit cards have become an increasingly important source of funds for many people. They also provide an accurate method of keeping records as well as providing the potential for segregating different expenses. In theory, credit card companies could become the consumerí s bookkeeper. Some credit card companies offer their customers an annual summary of their expenses, the totals for food, entertainment, clothing etc. All credit cards should provide this service to all their customers. It would provide credit card users with a clear picture of how they spend their money. Credit card interest should be made tax deductible and credit card companies should explore ways of providing more financial record keeping services for their users. James C. Benerofe March 12, 1998 Editorial # 7