So the conventional wisdom goes. But if you follow it blindly, you may miss out on key nuances of dealing with debt.
For instance, consider store-brand credit cards. They often offer no-interest financing, and rewards on store-bought products. Sounds great. But did you know those attractive financing terms can come back to bite if you carry a balance after a promotional period?
Then there’s mortgage debt. A big down payment may be a great way to steer clear of a huge home loan. But if you get the money for the down payment from relatives, lenders may scrutinize your financials closely. (more…)
The world is drowning in debt: personal debt, national debt, credit card debt, mortgage debt. Doomsday economists predict an imminent debt crisis that will plunge the world into another Depression, and TV talk shows are stuffed with experts extolling the latest scheme for living “debt-free.” But what exactly is this monster called debt that’s sucking up all of our income, ruining our credit scores and making politicians sweat? Is debt always a bad thing, or is a little debt necessary to achieve some of life’s most important financial milestones, like buying a home, a car, and paying for a college education? In this HowStuffWorks article, we’ll explain the difference between good debt (yes, it exists), bad debt, consumer debt and public debt, and even offer some advice on how to get out of debt.
Debt and credit are two sides of the same coin. Debt is something owed and credit is something given, usually in the form of money. A person who receives credit is the debtor or borrower, and the person who gives credit is the creditor.