The 4 Worst Kinds of Debt to Have in 2019

By Holly Johnson

Experts often say that debt can only be considered "good" if it's attached to an appreciating asset. Borrowing money to purchase a home that should rise in value over time is usually considered a smart move, for example. A business loan can also be a net positive provided the funds are used to help you become more profitable over the years.

On the flip side, there are plenty of kinds of debt that just aren't worth it — especially if the amount you owe is more than you can handle or your interest rate is absurdly high.

If your goal is building wealth and enjoying a life free of financial stress, your best bet is avoiding debts that make getting ahead harder than it has to be. Here are some of the worst offenders.

Student Loans

Student loans can be a net positive for your life if you borrow as little as you can and parlay your degree into a profitable career. And since federal student loans tend to come with low fixed interest rates, student debt doesn't have to ruin your life.

But what happens if you overpay for school — or if you borrow a ton of money but never graduate?

Far too many students have found out the hard way just how unforgiving student debt can be. For starters, it's nearly impossible to discharge student loans in bankruptcy, so you're probably stuck with your student loans until you pay them off — no matter how long it takes.

The high cost of higher education also means students are stuck borrowing more and more for a basic college degree. A report from College Board noted that, on a national level, even a public, four-year degree cost students an average of $21,370 per year for the 2018-19 school year when you add in room and board. That means it costs nearly six figures to earn a Bachelor's degree — and that's if you choose an in-state, public school.

If you find yourself struggling with student loan debt, consider looking into alternative payment plans like income-driven plans or refinancing your student loans with a private lender. (See also: Should You Refinance Your Student Loans?)

Credit Card Debt

Credit card debt is another wealth killer that can make it significantly harder to get ahead in life. Not only is credit card debt unsecured by any sort of asset, but the average credit card interest rate is now over 17%. That means that, no matter what you purchased on your credit card or how unnecessary it was, you could be paying out the nose to carry that debt from year to year.

If you're struggling with credit card debt, the first thing you should do is stop using credit cards. Then create a plan to pay down debt, possibly using the debt snowball or debt avalanche method.

You can also use a balance transfer credit card to secure 0% APR for a limited time, but this strategy only works if you have the discipline to quit using credit cards as a crutch. (See also: The Fastest Way to Pay Off $10,000 in Credit Card Debt)

Payday Loan Debt

Payday loans are meant to be short-term loans that help you get to the next payday, and they're mostly targeted at consumers with poor credit. But since they charge high fees and interest rates as high as 400%, these loans can trap you in a situation where you have to get one payday loan after another to pay your bills.

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