Excessive credit card penalties and tax

Credit card companies have been warned by the Office of Fair Trading that their late payment penalties are excessive and do not reflect the true costs banks incur.

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Comments

Interest as a deduction - that hasn't been my experience

SimonP | | Permalink

"Credit card interest will fall into the loan relationship rules, and generally be a straight trading deduction."

Now that is very interesting.

It has been my understanding that such interest is always disallowed as the IR take the view that credit cards are NOT loans due to the fluctuating nature of the balances, which is not a view that I agree with.

Many businesses use credit cards (a) for convenience and (b) because there may not be sufficient funds in the bank account. To my way of thinking, (b) is an alternative funding method and quite clearly a loan to the business and any interest ought to be deductible where business purchases are involved.