Eli’s Mind

What are the different kinds of debt? In most cases, the bank provides a client with loans and debts concerning: credit cards, mortgages, auto loans, student loans, and medical debts. A short and straightforward article “What are the Different Kinds of Debt” on equifax.com, states the properties for each debt, starting with the type of loan, interest rates, how to pay it off, and tax implications. With this information, it is clear that the type of loan which credit card debt provides is its main difference compared to other loans, “Credit card debt is considered a revolving account, meaning you don’t have to pay it off at the end of the loan term (usually the end of the month).” This shows the slight freedom and extra time a client may have in paying back the loan, despite being a small advantage, it may save one’s money. On the other hand, mortgages and auto loans are installment loans, which require the citizen to pay back in regularly scheduled payments. Secondly, another attribute that separates a credit card debt from other debts such as mortgage, student, and medical, is the tax implications. Unlike most loans, payments toward credit card debts are not tax-deductible; removing one extra fee for the borrower to worry about, “There are none, as payments made on credit card debt are not tax-deductible.” In the end, credit card loans can be categorized as more manageable and flexible debt transactions.