Credit Account Balances
Your credit account balance is split into categories that determine how interest is allocated.
Deductible principal
| Balance | Description |
|---|---|
| Invested Principal | Borrowed funds currently deployed in securities |
| Capitalized Deductible Interest | Principal created by capitalizing deductible interest (via Interest Capitalization events) |
Interest on deductible principal is tax-deductible. The sum of these two balances is your total deductible debt.
Non-deductible principal
Non-deductible principal is tracked as a single balance. It includes all borrowed funds not currently supporting investments — idle cash that hasn't been invested, personal borrowing, and any capitalized non-deductible interest. The app does not break this down further because the distinction doesn't affect interest calculations: all non-deductible debt is treated the same way.
Interest on non-deductible principal is not deductible.
Outstanding interest
| Balance | Description |
|---|---|
| Outstanding Eligible Interest | Charged interest on deductible debt — becomes a tax deduction when paid |
| Outstanding Non-Eligible Interest | Charged interest on non-deductible debt — not deductible even when paid |
Outstanding interest applies only when your lender adds interest to the credit balance ("Added to credit balance" mode). If your lender charges interest to a linked account, the interest is immediately paid and no outstanding interest is created.
Outstanding interest is not yet deductible for tax purposes. It transitions to "paid" (and the eligible portion becomes deductible) when you record a Credit Payment, Brokerage Transfer to Credit, or Interest Capitalization.
How payments work
When cash arrives at the credit account — whether from a Credit Payment or a Brokerage Transfer to Credit — it is applied in order:
- Outstanding interest first — split proportionally between eligible and non-eligible
- Principal second — split proportionally between deductible and non-deductible. Within deductible principal, the reduction is further split proportionally between invested principal and capitalized deductible interest.
You cannot target specific portions of your debt. This follows CRA proportional allocation rules.
Learn more
- How interest deductibility works — why these categories matter
- Mixed HELOC use — the proportional repayment rule
- Glossary — definitions of every balance term