Is all debt bad? Good debt vs. bad debt
Back to Topic
Click to Print
Useful Websites
Glossary Term Selection
By Nigel Woollsey
At a glance
-
Not all debt is bad – some assets and benefits are a good investment in your financial future.
-
Avoid using credit to buy ‘non-essential’ items or services, unless you can pay off the whole amount before any interest is charged.
-
Good debt doesn’t mean that the asset purchased necessarily increases in value, so long as it has additional benefits over time, such as a car loan.
Why not all debt is ‘bad’
Very often people will assume that all debt is ‘bad’. Sometimes owing money or obtaining any form of credit is considered indicative of poor money management skills. However, this is simply not true. Debt and credit can serve very useful and positive functions. Used correctly and with care, the use of credit and even debt can be ‘good’.
Examples of good debt
Good debt is a planned and budgeted for investment in your financial future. Sometimes having a small debt now can prevent a much larger expenditure later. Good credit can be used to purchase a...
Want to see the rest of this article?
Would you like to see the rest of this article and all the other benefits that Issues Online can provide with?
- Useful related articles
- Video and multimedia references
- Statistical information and reference material
- Glossary of terms
- Key Facts and figures
- Related assignments
- Resource material and websites
