What to consider before borrowing money

Responsible borrowing can help you build a good credit history. However, using credit to spend beyond your means can cause you financial problems.

Reviewing your budget when borrowing money

Ask yourself the following questions before you take out a loan or a line of credit:

Learn more about making a budget.

Learn more about credit and loan insurance.

What is the difference between a good debt and a bad debt

Good debt is an investment in something that creates value or produces more wealth in the long run.

Examples of a good debt may include:

Bad debt is borrowing to buy something that goes down in value or that you can’t repay on time and in full, thus incurring interest charges and more debt.

Examples may include:

You may end up paying for these purchases long after you’ve enjoyed the holiday or the dinner.

What happens to your loan payments if interest rates rise

If your loan or line of credit has a variable interest rate, your monthly payments may go up if interest rates rise.

Learn how to manage your money when interest rates rise.

Reviewing your credit or loan agreement

Read the terms and conditions of the credit or loan agreement carefully.

Take a close look at interest rates and fees. You may be able to negotiate the interest rate and terms of the agreement.

Ask your lender about anything you don't understand.

Lenders must get your consent before adding services to:

Learn more about giving express consent for financial products and services.

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