Good debt can be thought of as a loan used to purchase assets or investments that will grow over time. A mortgage to purchase a home or rental property is considered good debt because, generally speaking, home and property values appreciate over time. Typically, a loan to purchase a vehicle is not considered good debt because the value of a car depreciates quickly over time. However, if you require a vehicle to get to and from work, pick up kids and run to the grocery store, it's essentially a necessity and hard to live without. In this scenario, a loan for a vehicle would not be considered bad debt.
Bad debt is most often debt used to purchase trivial items or things that depreciate, or have little to no value, after purchase. Credit card debt falls into this category, as they are most often associated with purchasing little items that add up in a big way. Part of the reason people fall into the "buy now, pay later" trap is because it's very easy (almost too easy) to pay for things with a tap. Soon, that daily purchase of a double-double and a double chocolate donut has doubled your waistline and your debt! Credit cards allow us to spend without feeling the pain of paying. We receive a bill at the end of every month, after we've had 30 days to rack up all of these expenses. Now we don't have the cash to pay it off! This is a bad scenario all around.
