Learn which is which with the quick guide.
1. All debt involves owing money. But not all debt is the same. A key question is whether the cost of the debt is affordable in the medium and long terms, or will interest charges mean that deeper financial problems are inevitable? This is not just about the amount borrowed. Several thousand pounds of student loan is manageable because of the payback terms. Owing the same on in-store credit cards leaves budgets very tight. Experts say that having four or more current credit commitments is linked to a high risk of financial difficulties. So is spending more than 25 per cent of income on consumer credit. If your income is benefit level - 43.25 a week for a single person - that does not leave much room for debt.
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