What do these good-debt examples have in common? 소액결제 현금화 They all steer you toward your goals. Bad debt is the opposite. If good debt sets you up for smooth sailing, then bad debt is like swimming against the tide.

Credit cards. Almost all of us have encountered this one. As you probably know, interest rates on credit card debt are high, and your balance can quickly spiral if you let things get out of hand. As of 2021, the average American owed more than $5,000 on their credit card, according to Federal Reserve data. Try and pay in full each month, or simply stop buying so much on credit. Whittle it down, pay it off, then swear it off.

Luxury goods. Many luxuries are depreciating assets. Aside from being bright and shiny, they have no real use. Sure, a pair of mint-condition Air Jordans from the 1980s would be worth many times the initial store price, but most luxury goods fail to hold their value. There’s nothing wrong with luxury if you can afford it. But borrowing to buy it will steer you off track.

Payday and title loans. These loans are billed as ultra-short-term; they aim to bridge a budget shortfall between now and your next payday. But if you can’t pay the loan back within a couple weeks—and according to the Consumer Financial Protection Bureau, over 80% of these borrowers can’t—the interest rate soars, making it nearly impossible to pay back. Your credit score tanks, and you could even lose the title to your car. Short-term, nosebleed-interest-rate loans are goal killers.

*Auto loans. Why the asterisk? Auto loans can be good or bad debt, depending on the circumstances. If you need wheels to get you to your job, and you need to finance the auto purchase, it’s good—or at least necessary—debt. But a car begins depreciating as soon as you drive it off the lot. With automobiles, if you must borrow money, try to buy only the car you need, and no more. A midsize sedan or SUV will get you to and from work just as effectively as the luxury import or exotic sports car.