In the world of finance, you may have heard people talk about good debt and bad debt. Many people see all debt as the same, and it can be hard for them to make the right decisions when trying to choose which to pay off first, or when presented with even more credit. 

The good news? It’s easy to differentiate between good debt and bad debt.

Good Debt

Good debt is usually taken on as an investment into your future. Think of good debt as a means to an end in helping you get to the next level. If it helps you increase your income, build equity, or improve your quality of life in a significant way, then that would be considered good debt.

Examples:

• Student loans
• Business loans
• Mortgage

Bad Debt

Bad debt is typically taken on in ways that don’t directly improve your life or situation. Most bad debt comes with high interest rates attached to it, and while some of these examples can be argued as helpful in the moment, over time they end up costing you more money than saving and living responsibly. 

Examples:

• High interest credit cards
• Payday loans
• Bad credit / No Credit Car Loans

If you're worried about your debt load, you might consider a loan from Access Credit Union to consolidate your payments into a single, manageable one. Talk to one of our experts to see what is possible.