Which statement describes a not recommended debt management practice?

Which statement describes a not recommended debt management practice?

• A. Maintain a budget
• B. Accumulate high-interest debt
• C. Use credit sparingly
• D. Pay on time

Answer: (B)

Managing debt well means avoiding expensive borrowing and keeping spending within what you can repay. Accumulating high-interest debt is not recommended because the cost of carrying that debt grows quickly. With high interest, a large share of each payment goes toward interest rather than reducing the principal, so balances shrink slowly or not at all. Over time this can trap you in a cycle where new purchases keep adding to the balance, making it harder to gain financial footing. By contrast, maintaining a budget helps you see exactly what you earn and spend, so you’re less likely to overspend or rely on costly borrowing. Using credit sparingly limits how much debt you take on in the first place, and paying on time avoids late fees and protects your credit score, making future borrowing easier and cheaper if ever necessary. If borrowing is needed, look for lower interest options and aim to pay more than the minimum to reduce the principal faster.

Managing debt well means avoiding expensive borrowing and keeping spending within what you can repay. Accumulating high-interest debt is not recommended because the cost of carrying that debt grows quickly. With high interest, a large share of each payment goes toward interest rather than reducing the principal, so balances shrink slowly or not at all. Over time this can trap you in a cycle where new purchases keep adding to the balance, making it harder to gain financial footing.

By contrast, maintaining a budget helps you see exactly what you earn and spend, so you’re less likely to overspend or rely on costly borrowing. Using credit sparingly limits how much debt you take on in the first place, and paying on time avoids late fees and protects your credit score, making future borrowing easier and cheaper if ever necessary. If borrowing is needed, look for lower interest options and aim to pay more than the minimum to reduce the principal faster.