Are you considering taking out a new high-interest loan or opening a credit card? Do you already have high-interest debt? In either case, you may be wondering how this debt can impact your long-term financial health. Though it can be relatively easy to rack up a large amount of debt at a high interest rate, it may not be the best decision for your long-term . In fact, the cost in both time and money of this type of debt can have a devastating impact on your financial health.
Read on to learn what that impact looks like, the different types of high-interest debt you should avoid and . Earning passive income doesn't need to be difficult. High-interest debt hurts your financial health for a few reasons.
First, it’s expensive. For example, say you had $10,000 in credit card debt with a 20% interest rate and the payments on that account were calculated as 1% of the balance plus interest. You would spend over $16,000 in interest on the account by the time you paid it off.
That means your total interest cost would be over 160% of the total value of the original debt. So when you take on high-interest debt, you’re agreeing to a high cost of borrowing that equates to significant sums of money in the long run. If you spend a significant amount of money on interest, you could be forced to make tough financial decisions when you get paid.
You may have to forgo outings with friends and family or other luxuries because of the high cost of debt. Perhaps the most important way high-inter.