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what is bad debt

What Is Bad Debt?

What Is Bad Debt?

Debt can either be good debt or bad debt. Your credit history relies on how you pay your debt, but you need to know what is considered a bad debt. In this post, we will be explaining what is bad debt. 

Bad debt gets used to pay for things that lose value over time and take away your net worth. They usually come with high-interest rates and cost more than what you can afford over the long run.

To put bad debt into simpler words, we can say that bad debt is something you can’t afford and can’t make money from. 

Few Examples Of What Bad Debt Is

  • Credit card debt
  • Personal loans
  • Auto loans
  • Payday loans
  • Loan shark deals

If handled correctly, debt can positively impact your financial wellbeing. But, you need to make sure you never take out a loan you can’t afford. Use a budget to ensure you never miss a payment (and pay nonsense interest), and you’ll be on your way to financial freedom!

To learn more please check out the premium course. In the course Robert Kiyosaki explains advanced ideas behind bad debt vs. good debt.

Feel free to check out the same content in our explainer video at YouTube:


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