DEFINITION of 'Reloading'

A term lenders commonly use to refer to the habits of borrowers taking out loans to repay the balance on other loans. Often reloading is done to take advantage of lower interest rates offered by other loans, and potential tax benefits.


For example, let's say you have a large outstanding credit-card balance and are paying a high rate of interest (20%), but due to recent financial difficulty, you can keep up only the interest payments as the principal keeps building. So, you take out a home-equity loan to pay off your credit cards. The benefit of taking out the home-equity loan is that the interest rate is lower and also tax deductible. However, even though this may seen like a quick and easy solution to your credit problems, it is very easy to fall into a perpetual cycle of spending and borrowing, causing you to sink deeper into debt.

  1. Credit Card

    A card issued by a financial company giving the holder an option ...
  2. Interest

    1. The charge for the privilege of borrowing money, typically ...
  3. Loan

    The act of giving money, property or other material goods to ...
  4. Home-Equity Loan

    A consumer loan secured by a second mortgage, allowing home owners ...
  5. Tax Liability

    The total amount of tax that an entity is legally obligated to ...
  6. Transferable Points Programs

    With transferable points programs, customers earn points by using ...
Related Articles
  1. Home & Auto

    When (And When Not) To Refinance Your Mortgage

    There are both good and bad reasons to refinance. Learn more about both here.
  2. Options & Futures

    Home-Equity Loans: What You Need To Know

    We shed light on why consumers decide to use this form of debt and whether it is a good alternative.
  3. Investing Basics

    APR and APY: Why Your Bank Hopes You Can't Tell The Difference

    Banks use these rates to entice borrowers and investors. Find out what you're really getting.
  4. Credit & Loans

    5 Credit Cards For the Super Rich

    Understand the difference between an average credit card and an elite credit card for the wealthy. Learn about the top five credit cards for the super rich.
  5. Credit & Loans

    Explaining Equated Monthly Installments

    An equated monthly installment is a fixed payment a borrower makes to a lender on the same date of each month.
  6. Economics

    How US Interest Rates Move the World Economy

    Because the US has the world's largest economy, fluctuations in America's interest rates affect much more than domestic growth
  7. Savings

    The 5 Best Alternatives to Bank Saving Accounts

    Find out about some of the most profitable available alternatives to depositing money in a traditional bank passbook savings account.
  8. Professionals

    Socially Responsible Lending Goes Mainstream

    The solid rates of return that socially responsible lending has posted has caught the attention of institutional investors. Here's a primer.
  9. Professionals

    Small Business: Minimize Your Credit Card Fees

    Accepting credit cards is a must these days, but small business owners can take steps to minimize profit-eating credit card fees.
  10. Retirement

    Eyeing a 401(k) Loan? There Are Better Options

    A 401(k) loan may sound good but it's not worth the risk. Here are other options that allow you to leave your retirement funds untouched.
  1. Can an IRA be used as security for a loan?

    The IRS prohibits the use of an IRA as security for a loan. If an individual borrows money against his or her IRA, the IRA ... Read Full Answer >>
  2. Who do hedge funds lend money to?

    Many traditional lenders and banks are failing to provide loans. In their absence, hedge funds have begun to fill the gap. ... Read Full Answer >>
  3. When do I need a letter of credit?

    A letter of credit, sometimes referred to as a documentary credit, acts as a promissory note from a financial institution, ... Read Full Answer >>
  4. Can I take my 401(k) to buy a house?

    Once you reach 59.5, you can use the funds in your 401(k) retirement savings account to buy a house or any other expense ... Read Full Answer >>
  5. Can I use my 401(k) as a collateral for a loan?

    Although federal Internal Revenue Service, or IRS, regulations prohibit using a 401(k) account as collateral for a loan, ... Read Full Answer >>
  6. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!