Good Debt and Bad Debt
Having a credit card is one of the fastest ways to get you into debt, if you do not know how to handle your consumption well. However, not every debt is bad. Debt can be either good or bad and this article is going to show you each of them.

Good Debt
You have heard about bad debt but have you ever heard about good debt? Does good debt mean you do not have to pay for the debt? Of course not! Whether it is a good debt or a bad debt you will have to pay.

Good debt is debt that is benefiting you in the long term. For example, you have a mortgage loan for a bungalow you have always wanted to buy. You pay the 10% deposit and it takes you about 30 years to pay the remaining balance of the house with interest.


Although it takes about 30 years and you might even need to set aside a big sum of money to pay for the house every month, this good debt is going to bring you a bungalow with your name on it. In other words, it is the property you own and even it reaches the 50th year, the value will only appreciate and not depreciate.

Another good example of a good debt would be your car. Same principle goes again. You will need to pay a 10% deposit of the car and it takes you about 7 years to pay the car in full. Is it a debt you own to the bank? It is! And it is, again, your own car after 7 years of paying.

This is what people called the good debt. The debt that benefit consumers in the long term.

Bad Debt
Bad debt, on the other hand, can be either beneficial or costing you in the long run. How does bad debt benefit you?

In the case you are using a credit card to spend first and pay later, you are enjoying the benefit because you have already spent the money and purchased the item you want. The paying part is not costing you but yet, you have agreed to pay LATER at later stage. This does not mean you do not have to pay at all.

This is how a bad debt can benefit you.

When the bad debt is not benefiting you, it is like someone is owing you money and you are never going to get it back. This happens to a lot of big companies. Clients went bankrupt, is always the cause for not paying the debt to the creditors.

Credit Card – Good Debt or Bad Debt?
Is credit card benefiting you? Of course it is. Do you not have to pay for the debt? Of course you will need to. The thing is that, it has allowed you to be able to spend your money first, enjoyed the pleasure and pay later. It is still benefiting you, as a consumer. So credit card is in fact, a good debt.

Just a little insights on credit card debts.


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