Question

3 multiple answer 1 point
which of the following are examples of good debt? check all that apply.

• x using credit to buy electronics
• credit card purchases for groceries
• home mortgage
• car loan for a brand new car
• student loan
• cash advance for vacation

Explanation:

Good debt is debt that helps build wealth or has long - term benefits.

• Using credit to buy electronics: Electronics are often depreciating assets and this is usually bad debt. But maybe in some cases (like for a business - related electronic device) it could be considered, but generally, it's not a typical good debt. However, the other options:
• Credit card purchases for groceries: Groceries are consumable goods, this is bad debt as it's for daily expenses.
• Home mortgage: A home is an asset that can appreciate over time, and a mortgage is a way to finance a home purchase which can build equity, so it's good debt.
• Car loan for a brand new car: A new car depreciates quickly, but if the car is used for business (to generate income) it could be good, but generally, a car loan for personal use of a new car is not good debt.
• Student loan: Student loans are used to finance education which can lead to higher - paying jobs and increased earning potential, so it's good debt.
• Cash advance for vacation: Vacation is a non - productive expense, this is bad debt.

So the correct examples of good debt are Home mortgage and Student loan.

Answer:

C. Home mortgage, E. Student loan