Good debt and bad debt: what's the difference and why does it matter? Not all debt is bad. The difference between “good debt” and “bad debt” is economic, not moral — and knowing how to identify this is essential. The good one is one that can increase income or help build wealth, as long as the return compensates for the interest cost. Bad debt is used to anticipate consumption and tends to grow faster than income, putting pressure on the budget. In this context, expensive and poorly planned debt is a concern in Brazil today. As a result, consumption may lose strength and the economy may stop growing. In this video, you will understand why the problem is not having debt — but, rather, owing badly. Every week, g1 Explains simplifies the economy, the financial market and financial education, showing how all of this affects your pocket.