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. Interest

    The charge for the privilege of borrowing money, typically expressed ...
  2. Credit Card

    A card issued by a financial company giving the holder an option ...
  3. Tax Liability

    The total amount of tax that an entity is legally obligated to ...
  4. Loan

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

    A consumer loan secured by a second mortgage, allowing home owners ...
  6. Transferable Points Programs

    With transferable points programs, customers earn points by using ...
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