We will understand this fact by differentiating good and bad debt through examples. If consumer took on debt to buy something that will increase in value and contribute to consumer's overall financial health, then you can consider that debt a good depending on the kind of situation you carries it, for example, a home purchase can be considered as a good debt, as it will boost you financial condition. Another example of good debt is student's education loan. In the same way, there's bad debt too. Bad debt is a kind of debt that creates an unhealthy financial situation. Also consumers should know that credit card debt is often considered bad debt due to the nature of items that credit cards are used to buy them. Suppose the consumer is using the credit card for buying items like clothes and food, then has to pay the balance in full every month.