How much and the type of debt you have can impact your finances and your credit. It can affect the type of home you are able to purchase, the interest rates you qualify for, and even the type of home you are able to afford. Learn the differences between good debt and bad debt, examples of each, plus tips to avoid bad debt. 

What Is Good Debt?

Good debt is low-interest debt that will increase your net worth or income in the future. Think of student loans for a college education or graduate degree or a mortgage for a home that will likely appreciate. Put simply, it’s a debt that will eventually convert into an asset, or increase your net worth.

Mortgage Debt

If you own a home, chances are, you have a mortgage. In fact, 78 percent of all home purchases were financed with a mortgage in 2022. While it can be nerve-wracking to take on that much debt, a mortgage technically falls under the good debt category. (That’s provided you take out a mortgage that’s roughly 2 to 3 times your income, which experts recommend.)

Mortgages are considered good debt because the loan is secured by your home, which to creditors, means you are much more likely to make payments on time. A mortgage can also help you improve your credit long-term, since, again, you’ll likely be paying it on time. In short, having a mortgage is a good indicator of responsible credit use. 

Your mortgage will also likely be the lowest interest rate you’ll ever get, compared to other debt. For example, mortgage rates as of October 2023 were 8.471%, personal loan rates range from 6%-36%, and the average credit card APR is around 25%. 

Another reason why a mortgage is considered good debt? Your borrowing on an asset that will likely increase in value. While your home’s appreciation will vary based on the original price, neighborhood, age, and various other factors, many homes get more valuable as time goes by. In fact, homeowners who bought their homes 7 to 10 years ago could see as much as a 47% appreciation rate. 

Student Loan Debt

Student loan debt has increased 66% in the past decade, now totaling more than $1.77 trillion. With the cost of attending a four-year college or university increasing at such a breakneck pace, it’s fair to wonder if getting a bachelor’s degree is still worth it.

And the answer is still empirically, yes. 

A recent study from the Federal Reserve Bank of New York shows that the average bachelor’s degree holder earns an average of $78,000 annually, compared to the $45,000 average salary of a high school graduate.

Apart from the long-term financial benefits of a college degree, student loans are also considered good debt since they offer lower interest rates than other types of debt, and the interest can be tax-deductible. Plus, a college or graduate degree is an asset that will appreciate, as it often translates into greater financial success in the future. 

Small Business Loans

Let’s face it. Most startups need money. If you’re not in a position to find investors to put funds into your million-dollar idea, you may be considering a small business loan. While this can be daunting, even scary, a small business loan is considered good debt. 

This one can be tricky since not all loans obtained for your small business are good. Generally speaking, debt earmarked to pay for things that will help your business grow and be successful long-term is considered good, while debt obtained for your small business that doesn’t contribute to its growth isn’t. 

It’s worth noting that small business loans are notoriously difficult to obtain. A lender will examine your credit history, time in business, cash flow, and other financials. They may also require a small business plan. Our best small business loans guide breaks down the right type of loan for your business as well as how to prepare before applying.

What Is Bad Debt?

Bad debt is debt with a high (or variable) interest rate that drains your income or finances and doesn’t contribute to your overall net worth or income. Bad debt is also debt incurred to pay for assets that don’t hold their value, like a high-interest credit card used for non-essential expenses. 

Generally speaking, bad debt is also debt that, because of its high balance or interest rate, you are unable to repay. That means you could fall into a cycle of making payments that only cover interest, hence getting stuck with a bad debt that drains your finances for years to come. 

High-Interest Credit Cards

If you struggle with high-interest credit cards, you’re not alone. Recent data from the Federal Reserve Bank of New York reports that credit card balances in the U.S. have reached a record $1.05 trillion, while a staggering 30% of Americans report having between $1,001-$5,000 in credit card debt. 

But just because you can pay for it, doesn’t mean you can afford it. With the average credit card APY hovering around 24.99%, paying for that luxury item or nonessential purchase costs more than just the initial price tag. 

Credit card debt is considered a bad debt due to its high-interest rates, low minimum payments (many times just used to pay the interest on those purchases), and the fact that they’re likely used to buy items that aren’t increasing in value, or depreciating assets. 

That’s not to say all credit card usage is bad. If you’re paying off your credit card in full each month, it could help improve your credit history and credit utilization. 

Predatory Payday Loans

While a payday loan may seem like a good idea when you’re short on cash and payday is still days away, these high-interest loans are typically not your best option. In addition to a tight turnaround in terms of due dates, these loans have a staggering 400% APR. 

In most cases, you’d be better off securing a small personal loan or using a low-interest credit card to bridge the gap, as you’ll have a much lower interest rate and a more forgiving due date. 

Auto Loans

Your car may seem like a necessary expense. It’s how you get to and from your job, which allows you to earn an income. It could be your transportation to and from school, which opens up earning power in the future, or even how you get groceries to feed your family. So, why is it considered a bad debt?

In short, a car loan is a bad debt because it’s a loan on a depreciating asset. Within the first year of owning your car, it loses about 20% of its value. Plus, most car loans. With the average car loan hovering around 72 months or six years, chances are, you’re going to pay quite a bit of interest on a car purchase. Worst case scenario, you may even owe more on your car than it’s worth, depending on your loan term and interest rate.

Tips to Avoid Bad Debt

• Avoid high-interest debt, such as consumer credit cards. Using credit cards is a great way to earn rewards and save on everyday purchases but always pay the balance off each month.
• Build an emergency fund so you won’t have to resort to high-interest debt like payday loans. 
• If you use your credit card, pay off the balance each month. 
• Keep your borrowing under control. Don’t get a mortgage for more house than you need just because you can. The same goes for personal loans. If you must take one out, take the lowest amount possible to cover the needed costs.

If you don’t have a handle on your credit report to track the debt in your name, opening a Credit Karma account is a great idea. They’ll give you two of your credit scores (Equifax and TransUnion) and will also show you your credit report.

Use the information to put together a monthly budget that allows you to get rid of the bad debt you have as quickly as possible. As the debt begins to fade, you should notice a positive impact on your score.

Frequently Asked Questions (FAQ)

Final Thoughts on Good Debt vs. Bad Debt

Most of us are conditioned to believe all debt is bad debt. But it’s not quite so black and white. Good debt exists, like student loans and mortgages. Good debt also can help you increase your income or net worth down the line.

The trick to managing debt is to ensure you never find yourself in a position where you fall behind. Whether the debt is good or bad, it’s still debt and when you start missing payments, all of it turns into bad debt. Make sure that before you decide to open a new line of credit, you’re in a strong financial position and know that payments will come on time, every time.

The post Good Debt vs. Bad Debt – The Difference Can Save You Thousands appeared first on Doughroller.

The apps below are the favorites of the grocery receipt scanning crowd. Simply complete your grocery run, upload your receipt with your phone, or submit your e-receipt if you buy groceries online, and enjoy the cash flow return.

How Receipt Scanning Apps Work

The skeptical among us may think these apps are a scam, which is understandable. I’m a true believer that any company that offers people money for no additional work should be highly scrutinized.

The thing about receipt scanning apps, however, is that they are getting something from you: your shopping habits. The amalgamated information from millions of shopping receipts helps with market research. As ReceiptPal puts it:

So, not only are you getting your basic sustenance needs met, but you’re also helping the brands you know and love.

Which Grocery Receipt App Will Benefit You the Most?

Everyone tends to shop a little differently, and we all have different wants when it comes to rewards. Not every grocery receipt scanning app may match your lifestyle and preferences. Take a look at the consolidated chart below to help in your selection of the grocery-receipt scanning app that can benefit you and your grocery shopping style.

Related: 31 Apps That Can Make You Money

1. Fetch

This is one of the highest-rated grocery scanning apps out there, and Fetch’s reputation precedes it. For example, on the Apple app store, Fetch has a five-star rating from more than 1.1 million reviews, and users have scanned more than 623 million receipts for rewards.

The app is free to download and use, and your receipts will earn points for online shopping. Every time a receipt is uploaded, you’re absolutely guaranteed to earn points. This gives Fetch an edge over other receipt-scanning apps that require you to purchase specific items. Those points can benefit you two-fold if you also purchase products from the hundreds of household brands that partner with Fetch. Accumulated points can be redeemed at stores you’re likely already shopping at, like Wal-Mart, Target, and Amazon, to name a few. Read our full Fetch review here.

2. Ibotta

I blame Ibotta for my kombucha addiction of 2017. Every time I went to Target, I knew Ibotta had a deal specifically for a kombucha brand I loved, so I had no qualms about purchasing a little probiotic pick-me-up and getting some money back for it.

I can’t be alone, because this app is popular for receipt scanners, and Ibotta has paid out approximately $860 million in cash back to its loyal users so far. Ibotta has integrated cashback exclusive offers for in-store, online, and grocery delivery orders, making it extremely convenient to use during pandemic times. Just upload your receipt to the app or add the Ibotta extension to your browser to start earning cashback on your groceries.

3. ReceiptPal

After a big grocery haul, scan your receipt into ReceiptPal to unlock certain rewards. Users gain access to prizes at specific levels, kind of like a video game. For example, at level 1 you might qualify for a $5 Amazon gift card and at level 2 you might unlock a $10 or $25 gift card to Amazon, depending on the number of accumulated points.

Don’t sleep on your rewards either. ReceiptPal prefers users to upload receipts within the week that shopping is completed, and points are reset if there’s no activity for 90 days.

4. Kelloggs Family Rewards

So someone ate the last of the Frosted Flakes and had the nerve to put the box back in the pantry. No worries. With the Kelloggs Family Rewards receipt program, you’ll have the opportunity to enter into a host of sweepstakes as well as redeem rewards when you replace your favorite breakfast cereal. Rewards vary from a vintage Tony the Tiger tea set to a $15 gift card to From You Flowers, so be sure to check out all the assorted reward options before selecting.

As a charitable bonus, Kelloggs is donating $2 per purchase of Frosted Flakes to DonorsChoose.org, which helps kids and teachers get the resources they need during this challenging time in education. Simply upload your receipt from your smartphone to kfr.com.

5. Checkout 51

Checkout 51 is one more way to increase your rewards after waiting in the grocery checkout line. Every Thursday at 12 a.m. in your time zone, the app releases its brand deals for the week. If you buy from those brands and upload your receipt while the offer is live, you’ll be rewarded. When your account reaches $20, Checkout 51 mails you a check, and you just got paid for eating.

As a little extra perk, some offers can be claimed multiple times. Meaning, that you could potentially earn extra points for stocking up on toilet paper, if the offer applies to the brand.

6. Receipt Hog

Hog those grocery store receipts! Before you crumple that paper up and lose it in your purse or throw it in the trash, snap a pic of it and submit it to Receipt Hog. Grocery receipts, specifically, will earn you points called coins in the app. Once you’ve stacked enough coins, you can cash out with either PayPal or Amazon.

Receipt Hog will only take receipts within 14 days of purchase. It may also take the app seven days to review and approve your receipts for rewards. New users will need to complete a survey, verify their device and their email before cashing out their coins.

7. CoinOut

CoinOut makes earning from your grocery purchases a no-brainer. Instead of putting users through months and months of receipt collecting to earn rewards, CoinOut makes it possible to cash out whenever you want with no minimum requirements.

Make sure your receipt’s date is within two weeks of the upload date and that the merchant’s name and total price are completely visible. The more you use the app, the more you’ll receive offers and bonuses tailored to your spending habits.

8. Coupons.com (formerly SavingStar)

SavingStar was once a darling among grocery receipt app users. Sadly, the platform folded in late 2020. But its coupon savings and cashback deals live on through Coupons.com, and you can keep earning cash from your grocery bill. Receipt collectors, rejoice.

Whether you get your fresh fruit from Costco, Target, or Whole Foods, it doesn’t matter. The Coupons.com app will accept your receipt and, as long as you purchased at least one item from their offers list, you’ll receive money back. Your money goes straight to your PayPal account, so no need to worry about any cash-out minimums.

9. Honey (online)

Honey has become so ubiquitous with online deals that it may be easy to forget that this cashback giving app can apply to your groceries too. That is, as long as you’re filling your virtual grocery shopping cart on a web browser. This is the app I use personally to earn points for my grocery orders that I schedule for pick-up from Kroger. Grocery bills add up, so it’s fairly easy for me to get to the $10 Amazon reward card every so often.

Honey dispenses Honey gold to its 17 million worldwide users when the browser add-on is used, even if there are no savings coupons to be found. Once you’ve reached 1,000 honey gold, you’ve earned a $10 gift card from one of their many partner companies, no extra spending on your part necessary.

Related: Best Cash Back Online Shopping Sites

Bottom Line

There are many receipt-scanning apps to sift through to find the one (or few!) that works for your lifestyle and will actually benefit you by putting money back into your pocket. Make sure to read up on the reviews and verify the efficacy of the company before downloading and giving any app-sensitive information, like your bank account information.

Once you’ve found the right grocery store receipt-scanning app for you, why not earn a little moolah with your milk? Or put some ca-ching back in your bank account with those potato chips? Or save some bills with that bacon? I could go on, but you get the idea. Grocery receipt scanning apps are an excellent way to consistently save a few bucks while completing a task you have to do anyway.

Related: 6 Best Cashback And Rewards Apps

The post 9 Best Grocery Receipt Scanning Apps to Make Money appeared first on Doughroller.