Q COSTARICA — In an environment where borrowing is part of everyday household life, a deeply ingrained perception persists: going into debt is synonymous with a bad financial decision.
However, experts warn that this idea is not only incomplete but can also lead to uninformed decisions.
Borrowing plays a significant role in the household economy, whether to face emergencies, cover needs, or finance assets. However, its impact depends directly on the purpose, the terms, and each person’s actual ability to pay.
Data from the Escuela de Estadística de la Universidad de Costa Rica (UCR) — School of Statistics at the University of Costa Rica, shows that 42.2% of debt is concentrated in financial institutions, while 13.6% corresponds to cooperatives, confirming the weight of the formal system in access to financing.
“The problem isn’t debt itself, but how it’s used. It can be a useful tool or a risk factor, depending on whether the person understands its terms and whether the debt fits their financial reality,” explained Cindy Rivera, Financial Inclusion Manager at Coopenae-Wink.
Myths that continue to shape our relationship with debt
Breaking down myths surrounding debt is key to improving financial decision-making. In this context, having adequate financial education and access to specialized advice allows us not only to better understand debt but also to question beliefs that can generate unnecessary risks.
One of the main mistakes is assuming that all debt is negative. This perception can lead to avoiding the formal financial system or resorting to informal mechanisms, which involve higher costs, less transparency, and greater risks.
The idea also persists that if a financial institution approves a loan, the person can necessarily take it on. However, credit capacity doesn’t always reflect the full reality of a household or its total level of indebtedness.
Another common myth is that paying only the minimum amount on credit cards is a good practice. In practice, this habit can prolong debt and significantly increase its cost over time.
Between Opportunity and Risk
Debt can be a tool for well-being when it serves a clear purpose, such as buying a home or paying for education, and when it doesn’t compromise basic household expenses. However, it becomes a vulnerability when it’s used repeatedly to cover daily needs or when multiple obligations accumulate.
According to the UCR’s Economics Survey, 78.1% of people report having received information about interest rates when taking out a loan. However, gaps in financial understanding still exist, directly impacting decision-making.
“Talking about responsible borrowing isn’t about discouraging credit, but rather helping people use it wisely, with information, and with a focus on well-being. Financial education is what transforms credit into a useful tool. It allows people to understand costs, anticipate risks, and make more sustainable decisions,” Rivera added.
Furthermore, many people lack sufficient resources to cover unexpected expenses solely with income or savings, which explains why credit remains a frequent response to household emergencies.
Financial Education: More Than Just Information, a Tool for Well-being
Strengthening understanding of interest rates, repayment terms, total costs, and repayment capacity is key to avoiding over-indebtedness and making sustainable financial decisions. In this regard, access to clear information, practical tools, and specialized support allows people to develop stronger financial judgment and anticipate potential risks.
Coopenae-Wink reaffirms its commitment to financial education as part of its mission, promoting not only a better individual relationship with money but also collective well-being through more informed, responsible, and sustainable decisions.