Credit Card Debt
Credit Card Debt is Generally Bad Debt
Having and using a credit card can help your credit report if you keep it below the 20% debt to income ratio and you pay it down substantially each month. Generally speaking though, high interest credit card debt is bad debt. This of course is assuming that you have a balance that carries forward each month.
The reason for this is that making a purchase with a credit card is not the same as making the purchase with cash. Paying in cash does not require that you pay high interest on a purchase while that purchase drops in value.
Think about it -- when you buy clothes with your Macy's card, they are already worth less than 50% of what you paid for them when you walk out the door. Since you've bought these clothes on your credit card (assuming that you carry a balance and will be accumulating interest) and they immediately depreciate, this is bad debt.
Debt to Income Ratio
Debt to income ratio is the amount of what you owe relative to the amount that you earn. Most creditors set 20% as an acceptable debt to income. This means that you should not owe more than 20% of what you make. Even if you pay all your bills on time, if you have higher than 20% debt to income ratio than that's considered bad debt by the creditors.
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