Debt can finance personal, household and business needs and aspirations. That’s the New Zealand Bankers’ Association’s response to Money Week’s big question: what does debt do for you?
“We often need to borrow money to buy our own home or get a business off the ground. That’s the kind of debt our banks are here to support,” says New Zealand Bankers’ Association chief executive Karen Scott-Howman.
“This is often seen as ‘good debt’. Borrowing for something that’s likely to retain or grow in value over time makes sense. Borrowing for things that will lose value, or ‘dumb debt’, isn’t such a good idea.
“As responsible lenders, banks work hard to ensure their customers know what they’re signing up to when they take out a loan. Being clear on your obligations as a borrower is really important.
“Banks are always willing to provide advice about the lending products and services that are right for your particular circumstances. It’s worth having a chat and checking out your options.”
Tips for managing debt include:
- having a plan to pay off your loans
- asking your bank how you can be debt-free faster
- avoiding ‘dumb debt’
- only borrowing for what you need.
Money Week is organised by the Commission for Financial Capability and runs from 14 to 20 August.
More information is available at: www.sorted.org.nz/moneyweek