This article is from the Rat Health Care booklet. Because rats live in such close contact with their litter and bedding these must be kept clean and free from toxins.
Litter is a product put in the bottom of the cage or litter box to absorb wastes.
Bedding is nesting material used for sleeping and is usually confined to the nest box. Bedding obviously needs to be a soft material, but litter can be made from hard pellets or granules. Some rats don't like the hard pellets at first, but they quickly get used to them. See the article on beddings for more information. Although I don't recommend cages with a raised wire bottom because this can lead to bumblefoot, if your cage does have a raised floor you could use newspaper in the tray underneath.