The interactive tools and plain-English guides you need to get out of debt faster — and decide when not to.
Not all debt works the same way. Here is a summary of the most common types Canadians carry — what they cost, how they work, and what to do about each.
Highest interest rate of any common consumer debt. Carrying a balance is one of the fastest ways to destroy wealth.
Not all debt is the enemy. Understanding the difference between debt that builds wealth and debt that destroys it is one of the most important financial literacy concepts.
Good debt has a low interest rate, finances an asset that appreciates or generates income, and has a clear repayment timeline. A mortgage at 5% on a home that appreciates at 4-6%/year can build wealth over time. A student loan for a nursing or engineering degree with strong employment outcomes is an investment in future earnings. The test: will this debt make me richer or poorer in 10 years?
Bad debt finances things that lose value immediately or carries interest rates so high that the cost destroys wealth faster than any investment can build it. A $5,000 credit card balance at 20% costs $1,000/year just to stand still. A payday loan of $300 can cost $60-$90 in fees for 2 weeks — over 400% annualized.
Some debt is neither clearly good nor bad — it depends on the rate, your alternatives, and your discipline. A car loan at 4.9% for a reliable vehicle you need for work is reasonable. A HELOC at prime + 0.5% used to renovate a kitchen is arguably wealth-building. The same HELOC used for a vacation is bad debt with a low rate.