Conversely, "bad" debt is incurred for immediate consumption of depreciating assets, or for things you can't afford, and it often comes with high costs and little long-term benefit. This is the road to financial struggle: Clothing Accounts: This is a classic example of bad debt. Not only do you pay substantial interest, but you also often incur a monthly fee just for having the account (which can range from R15 to R68, as widely documented by consumer advice websites). Furthermore, many accounts hit you with an "initiation fee" when you first open them. Consider this: clothes valued at R1000 can easily cost almost a third more by the time you've paid them off six months later. And by the time the loan is finally settled, the clothes themselves have likely lost their shine. It's simply not worth it. Debt for Immediate Expenses: Making debt to cover day-to-day living expenses, impulse buys, or non-essential items, without a clear repayment plan, is a dangerous habit. If you can't keep up with these payments, you could rapidly find yourself with a poor credit score. A bad credit score makes it incredibly difficult to secure crucial future loans for things like a car or a house, significantly impacting your ability to achieve major life goals.