Interest-Free Debt Consolidation

There are two types of debts: there are good debt which is mortgage debts and tax deductible debt and then there is bad debt which is normally credit card and consumer debt. So the answer to the question is this, if you have bad debt and you have a credit score that is available for you to consolidate those debts under a home-equity line of credit, which is good debt because it’s tax-deductible, then by all means consider using this effective strategy.

What it does is allows you to consolidate your debt, which is formally bad debt, consumer debt, roll it up and put it into your home equity through a line of credit and therefore becomes part of your over-all title on your home. Usually the line of interest, the credit that you pay on this good debt is much lower than you would pay on the bad debt. So the answer to the question is, normally because of the tax-deductableness of that home equity line of credit, you can cancel out the actual interest charges that you’re paying. So that’s as close as you can get to an interest-free consolidation.