Debt: Might Not Be So Bad
Debt: Good and Bad
Although the word debt is stigmatized with a negative perception there are some forms of debt that can be good debt. Debt can be categorized as good or bad depending on several factors: how it affects your credit score, how much the debt is costing you or even the way the debt makes you feel in your day to day finances. Any debt that you lose sleep over is bad debt, however not all debt is worth losing sleep over. Below are a few categories of good and bad debt.
Student Loans: Good Debt
Although student loans may be burning a hole in your monthly budget they are usually available at relatively low interest rates, have flexible payment options, and are a great investment in yourself. Student loans also do not weigh negatively on your credit score as heavily as other categories of debt. For these reasons student loan debt is categorized as good debt. For a pain free method to pay off your student loan debt quicker click HERE
Car Loan: Bad Debt
Many require a car loan before purchase of a vehicle. Although a car is a necessity (thus making the car loan a necessity) car loan debt is bad debt. Vehicles lose value at astronomical levels with the slightest damage, age or use making them a horrible investment. To soften the blow - most auto loans come with a low interest rate making them inexpensive debt.
Mortgage Loan: Good Debt
A home loan is a must for most want to be home owners. Home loans are considered good debt as they are a great, practical investment that can increase in value. Home loan debt can also have a positive impact on your credit score over time with timely consistent payments.
Credit Card Debt: Good/Bad
Credit cards have a reputation for being bad debt. A reputation well deserved with their characteristically high interest rates and vastly negative impact on your credit score. However, if you were to obtain a credit loan with 0% interest this can be considered good debt as it is costing you nothing. This circumstance arises from 0% APR purchase offers and balance transfer checks. So depending on the terms of your credit debt - it can considered good or bad debt. A 0% credit offer is available HERE
Cash Advance/Payday Loan - Bad Debt
Known for high interest rates and short term pay back periods - a payday loan is something to stay clear of and is absolutely bad debt. If in need of cash better to use a 0% APR credit card as they offer no cost and typically a period of 12-24 months to pay back.
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