loanmart.com

loanmart.com

What kinds of debt are toxic? Is there such a thing as good debt? What kind of debt you own and how well you manage it will determine your credit worthiness. Having too much toxic debt like credit cards, online payday lender loans, and car title loans left out for a long period of time is not the best plan for a well-functioning budget. It is important to understand how this debt will hurt your finances for longer than you realize when it is left unpaid.

The idea of a loan or using credit is based on an agreement between lending company and borrower. A borrower will promise to pay back the money on a set schedule according to the terms and conditions of the loan. There will be interest charged to the account on how much of the loan is left unpaid. Credit cards, which are revolving accounts, expect minimum payments which cover the interest charge and a small percentage of the principle balance. It is an open account with a spending ceiling for how much the borrower can use. The catch with credit cards is that the unused portion can be used at any time. The more payments you make, the more money a person could potentially spend. This is very tempting to someone who does not have extra money in the everyday budget.