Can debt ever be a good thing? The term “debt” implies a significant burden, which it certainly can be.
But the truth is, some forms of debt can contribute to your financial well-being. So what’s the difference between good debt and bad debt, and how can you tell when debt you’ve acquired is doing more harm than good?
Good Debt
Debt is considered “good” when it provides a long-term benefit, such as increasing your income or building wealth. Plus, when you acquire debt responsibly, paying it off in a timely manner can help build your credit score.
Common examples of good debt can include:
Bad Debt
Bad debt is typically characterized by high interest rates and an inability to repay that debt. It is important to note that good debt like student loans can become bad debt if you take on too much.
Bad debt might include:
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