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RBC Financial Planning - Tips on Budgeting and Borrowing

Credit Lines & Personal Loans


Making credit work for you

Use it wisely and credit can help enhance your lifestyle, save you time and make your life more convenient. Use it carelessly and it can get you into a lot of financial trouble. The most important thing to be aware of is that some debt is bad and some is good.

Bad debt is used to buy things with depreciating value (like furnishings, cars, clothes) or no residual value (like vacations). The worst kinds of debt, as in department store credit or consumer credit card debt, also carries high rates of non tax-deductible interest.

Good debt is used to buy assets that have the potential to appreciate in value (like investments and real estate). Assets like these can act as security for the loan and can allow for a lower interest rate. Interest on good debt may even be deductible for tax purposes.

One excellent purpose for going into debt is to finance your RRSP contribution, a strategy which has been discussed in the section, Should you borrow for RRSP contribution?

Important information about our financial planning services can be found at the bottom of our homepage.

Making credit work
for you
Line of credit: A
valuable financial tool


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