Deadweight Debt  

Definition Deadweight Debt. Debt that is incured but does not create any meaningful asset or spending which might help may the debt off in the future.

For example, if you have a credit card debt with 17% interest, the interest payments on your initial debt will increase your total debt, but, will help in no way to pay off your debt. If you took on debt to buy a car, essential for getting to work. This debt can be used to help you earn more and pay back the debt.

For a firm the same situation applies. e.g. debt on interest payments is deadweight debt. Debt to finance investement isn't.

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