What to do with low fixed for the life of the loan transfer balance?
I have a 15k credit card that is offering a 3.99% (lets say 4%) balance transfer for till the balance is paid off. Fees are capped at $ 200. Assuming that:
— I will never default and will not jeopardize this interest rate,
— I can afford the required monthly payments (2%) on this loan
I can do two things with this offer:
1. Stick it into a high interest account ~5% and pay minimum + a little extra to pay it off in say 5 years. With this approach, I make an effective 1% a year on the 15k. If I did this, would I I pay taxes on the entire interest earned on 15k @ 5%? Can’t I deduct the 4% interest payments as investment expenses? If not that reduces my effective gain.
2. Put this towards my mortgage – currently 200k @ 5.125% for 30years, and make payments to the credit card. If I do this, how do I deduct the interest on the card as mortgage payments? Is this allowed? How would one represent that on a tax return?
Thanks in advance for the answers.
Sorry, to explain further, I have a zero balance on this credit card and have a credit limit of 15k on this card, all of which is available for this balance transfer offer.