Is There Really Such a Thing as ‘Good Debt’?


Q: Is it ever a good idea to take on new debt, or should we avoid it at all costs?

Debt isn’t inherently good or bad. But how you use this financial tool can potentially have positive or negative effects on your financial situation.

For example, you may have heard that credit card debt is “bad debt.” Yet scoring a new card with a no-interest promotional period can be a major asset for a responsible entrepreneur trying to jump start a new business. Likewise, while mortgages and student loans are sometimes considered “good debt,” if your home’s underwater (meaning you owe more than it’s now worth) or your expensive degree doesn’t help you land a good job, it can feel pretty bad.

Along the same lines, paying interest isn’t necessarily good or bad either. It’s simply buying yourself more time, like being able to pay off a mortgage over 30 years instead of purchasing a home in cash upfront, or delaying paying for college tuition until you’ve graduated.

Before taking on any kind of new debt, make sure you understand the tradeoffs. Ask questions like: What’s the interest rate, and total cost of borrowing the money over the life of the loan? How much can I afford to pay each month, and is that worth the amount of time I’m buying myself?

Ultimately, making the right decision is all about understanding how the debt works and having a plan to pay it down as efficiently as your budget allows.

Grow Financial Advisor Panel participants are responsible for the content expressed and do not necessarily represent the views or opinions of Acorns Grow, Inc., Acorns Securities, LLC or Acorns Advisers, LLC. Content is provided on an informational basis and should not be construed as investment advice. Individual circumstances will vary. Please consult a financial advisor before acting on any opinions expressed. Participation in the panel is voluntary. Editing of advisor responses is for brevity and clarity; no editorial privilege is exercised.

acorns+cnbcacorns cnbc

Join Acorns


About Us

Learn More

Follow Us

All investments involve risk, including loss of principal. The contents presented herein are provided for general investment education and informational purposes only and do not constitute an offer to sell or a solicitation to buy any specific securities or engage in any particular investment strategy. Acorns is not engaged in rendering any tax, legal, or accounting advice. Please consult with a qualified professional for this type of advice.

Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. It is not possible to invest directly in an index.

Advisory services offered by Acorns Advisers, LLC (“Acorns Advisers”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Brokerage and custody services are provided to clients of Acorns Advisers by Acorns Securities, LLC (“Acorns Securities”), a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Acorns Pay, LLC (“Acorns Pay”) manages Acorns’s demand deposit and other banking products in partnership with Lincoln Savings Bank, a bank chartered under the laws of Iowa and member FDIC. Acorns Advisers, Acorns Securities, and Acorns Pay are subsidiaries of Acorns Grow Incorporated (collectively “Acorns”). “Acorns,” the Acorns logo and “Invest the Change” are registered trademarks of Acorns Grow Incorporated. Copyright © 2019 Acorns and/or its affiliates.

NBCUniversal and Comcast Ventures are investors in Acorns Grow Incorporated.