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  • Writer's picturezarreen soni

Bad debt and good debt? What’s the difference?

Let's first explore the differences between good and bad debt:

If the debt you take on helps you earn money and boost your net worth, you might claim that the loan is "positive." Debt that greatly improves your and your family's quality of life in other ways is likewise acceptable. Debt may be beneficial to your overall financial status in a variety of situations. A home, a business, and education are some examples of positive debt.

Bad debt is typically thought of as money borrowed to buy an asset that will depreciate over time.

The interest rate on debt that is bad for your finances is usually high. Your credit score can suffer if you have too much debt. Your credit score will suffer if you utilize a revolving line of credit excessively, such as by charging the maximum amount allowed on your credit card. Cars, clothing, and consumables—basically, luxury purchases that aren't necessary helpful for your finances or advancement—are examples of bad debt.

The conclusion is...

Not all debts are created equal. Good debt has the potential to enhance your wealth, whereas bad debt costs you money with excessive interest on purchases for depreciating assets.

The value of a debt might occasionally depend on a person's financial status, particularly how much they can afford to lose. Consider speaking with a knowledgeable financial counsellor to go over your debt position and your choices for controlling it.

At Clear Review we offer you top quality finance services and expert advice, so they are able to live a stress-free, debt-free life.

Contact Clear Review Consultants for a tailor-made financial solution plan on 0215696041 or visit our website to fill out a form:

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