Is there really a bad debt? People may think that having "debt" is a bad thing. It's something to stay away from. Since it is a bond to financial freedom but this idea is not entirely correct. Because in fact, “good debt” exists, but what kind of debt is considered good debt? This article will solve the doubts.


Financial planners say there are two types of debt: good debt and bad debt. Good debt is the debt to increase income, create wealth for us in the future, such as house debt, business debt or business expansion, education debt, etc. Bad debt is such as debt arising from various expenses that hardly contributes to increasing wealth or increasing income in any way.

The question to ask yourself before incurring debt is whether it is really good debt or not. “Will we make more money out of debt than the total amount we pay off the debt?” when including principal and interest. Is the debt to be incurred reasonable or not? Will that debt creates added value? Are there any other ways to grow your money than an investment loan? In the same amount of time, are there other investments that are more worthwhile? So that we can It is reasonable to determine whether the debt will bring good investment profits or will debt become a burden. If you look at it from this angle, credit card debt can be considered good debt if you pay off all the debt each month without paying interest and get reward points or cash back as well.

Good debt, such as a home loan, it is one of the best and safest debt. Since it is almost impossible that the average middle class who is going to have enough money to buy a house. And the house is one of the 4 essentials for living. In general economic conditions, a house or other real estate’s price will increase over time, so the monthly mortgage payments that we pay every month are investments for our future assets. Especially if combined with the benefit of being a residence or renting out. It makes borrowing money to buy a house even more worthwhile. In addition, the value of the real estate that increases over time can also beat inflation. Especially if coupled with a good loan repayment plan, such as refinancing at the end of the period when the bank gives low interest. This is usually done after 3 years, plus paying off or paying more debt than the monthly payment will help save interest and close the debt much faster for many years as well.

Education debt In general, higher education brings a higher salary or income. However, there is a rule in student loans that should never be higher than the amount expected to be earned for education in the first year of employment. For example, if you think that when you graduate, you will receive a monthly salary of 20,000 baht, which means that you will earn 240,000 baht in one year. It means that you should not borrow more than 240,000 baht for education. Salary will be gradual. The higher the debt burden, the lighter and the faster the debt can be paid off as well.

Debt for business or business expansion many people have good business ideas. Finding a good location but no funds Business loans are an attractive option. Because if it can generate profits more than the principal and interest borrowed, it is considered good debt. But caution and practice before taking a business loan is A good business plan that is clear before taking a loan. Both forms of business Customer groups estimate monthly income and expenses, profits, future business goals. It’s believable that thinking of taking a personal business loan surely you will have some business ideas in your head. But these plans will give you a clearer picture of your business and make them aware of the errors that may occur during the business in order to be able to prepare for corrections in a timely manner


Borrowing money is not scary if you can manage and plan your debt repayment carefully and carefully. The key is not to incur more debt, but no matter what you invest. Please keep reminding yourself that every investment has risks that must consider carefully before taking action every time. If you are interested in buying a new home loan with great offers from SCB, read more here. https://www.scb.co.th/th/personal-banking/loans/home-loans.html

Reference

https://www.cnbc.com/2020/07/20/good-debt-vs-bad-debt-why-what-youve-been-told-is-probably-wrong.html#:~:text=%22Good%22%20debt%20is%20defined%20as,to%20improve%20your%20financial%20outcome.