Should We Use Credit?

Is credit a good or bad thing? A good understanding of what exactly is meant by credit will help avoid it becoming a problem.

What is the difference between credit and debt?

Six months FREE credit. Credit available. All items can be purchased on Credit.

These are the type of slogans which are used to tempt people and convince them to purchase now.

Perfectly acceptable commercial practices, but it is very important that we understand what it really means. For example, do you think as many people would be attracted by a headline which invited you to go into DEBT for three years? It might make you think a little differently about just how important this particular purchase is to you and is it really vital to act right now?

While the purchase represents a credit to the merchant, as far as the customer is concerned it is nothing more or less than a debt. Of course, the concept of debt is not totally negative and much of the world’s current prosperity relies on the idea that some current consumption must be paid for out of future income.

This is true of individuals, corporations and even countries. You might wonder if any amount of debt is acceptable. The answer, say most economists is a resounding yes, of course it is! Not all debt is bad or even unavoidable. The vast majority of us these days must take out loans; e.g. to buy a house, get a secondary degree or buy a new car. Problems arise, however, when consumers overspend with little regard to their ability to repay those loans.

Just how much should be borrowed and how and when to pay it back is beyond the scope of this short article, but details can be found in others by the same author.

There is no doubt that when it is used correctly, credit can be a positive force.

It is essential to have the right knowledge, so if necessary, do your research or consult an expert.