What is:GOOD DEBTBAD DEBTWhat is bad debt?7 of 11The term bad debt refers to borrowing to pay for items that depreciate in value, such as credit cards and auto loans.Today's borrowers have to toe a fine line, Feddis says. They should be wary of overextending, but they should also acknowledge that even bad debt can be good in moderation."When credit is used responsibly, it has great value," she says. "It can build wealth, or be used for emergencies or for getting through a rough time. But it is important to understand what the commitment is." Related Articles:Credit cardsMortgage calculatorStudent loansDump debt in 2010Related Links:Best 2010 credit card movesDebt reliefDebt payment calculator10 ways to debt disaster advertisement
The term bad debt refers to borrowing to pay for items that depreciate in value, such as credit cards and auto loans.
Today's borrowers have to toe a fine line, Feddis says. They should be wary of overextending, but they should also acknowledge that even bad debt can be good in moderation.
"When credit is used responsibly, it has great value," she says. "It can build wealth, or be used for emergencies or for getting through a rough time. But it is important to understand what the commitment is."