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Good debt and bad debt

In the game not every debt costs the same. Every loan rate is the central bank rate of the economy plus a fixed margin: mortgage 1.5 points, car loan 3, consumer loan 5, overdraft 9. In a boom the game sets the central bank rate at 3 %, so the loans cost 4.5 %, 6 %, 8 % and 12 %.

On a debt of €5,000 that is €225, €300, €400 and €600 in interest over one year without repayment. Paid off in 24 equal monthly instalments, it costs €237.74 in total as a mortgage and €648.82 as an overdraft.

Worth remembering

What a debt costs depends on its rate and its term. Whether it is worth it depends on what it pays for.

One worked example

€5,000 paid off in 24 monthly instalments costs €237.74 in interest as a mortgage and €648.82 as an overdraft.

Simulated: figures from the game T.O.U.G.H., not statistics about real people.

Questions people ask

Why does an overdraft cost more than a mortgage?

In the game every loan is the central bank rate plus a margin, and the overdraft has the largest one: 9 points against 1.5 for a mortgage.

What is the difference between good and bad debt?

Not a moral one. It is whether the money pays for something that lasts longer than the debt, and how much the interest costs for it.

How much interest does a loan cost in monthly instalments?

In the game €5,000 over 24 months costs €237.74 in interest as a mortgage and €648.82 as an overdraft, worked out with equal instalments.

Source: Deutsche Bundesbank, MFI-Zinsstatistik, as of 19 October 2026

This lesson is part of Pro
What you can try in it

One debt as mortgage, car loan, consumer loan and overdraft, side by side.

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Education, not advice. Disclaimer