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
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?
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