Not all debt is equal. Good debt has low interest rates and builds long-term value: Home loan at 8-9% builds an asset, education loan invests in your earning potential, business loan funds growth. Bad debt has high interest and funds depreciating things: Credit card at 36-42% per year is the worst, personal loans for vacations or gadgets at 14-18% drain wealth, BNPL and EMI on consumer goods add up silently. The rule is simple: if the debt earns you more than it costs you, it is good. If not, eliminate it as fast as possible.
Key Takeaway
Good debt builds assets or earns returns greater than its cost. Bad debt funds consumption. Eliminate bad debt before investing.