Glossary
Consumer Debt
Consumer debt refers to money owed by individuals for personal, non-business expenses, including credit card balances, auto loans, student loans, personal loans, and mortgages. It is typically used to fund everyday purchases or larger life expenses.
What are the main types of consumer debt?
Common types include credit card debt, student loans, auto loans, personal loans, and home mortgages.
Is all consumer debt bad?
Not necessarily. Some debt, like a mortgage or student loan, can be considered "good debt" if it supports long-term growth. High-interest debt like credit cards is riskier and more costly.
How does consumer debt affect my credit score?
Your credit utilization ratio, payment history, and debt mix all impact your credit score. High or mismanaged debt can lower your score.
How can I reduce consumer debt?
Strategies include budgeting, debt snowball or avalanche methods, consolidating loans, and negotiating lower interest rates with lenders.
What’s the difference between consumer debt and business debt?
Consumer debt is for personal expenses, while business debt is incurred for commercial or investment purposes. Each type has different tax and legal implications.
Subscribe to our newsletter
Get the latest on finding, evaluating, and working with financial advisors; delivered right to your inbox.
