Consumer Debt
You like to buy stuff. So you use a credit card to purchase that Sham-Wow you saw on television, and a Domino’s pizza. As a consumer…you now have consumer debt.
If you would have used cash instead, the stuff you bought wouldn’t have been classified as debt.
And if you bought that Sham-Wow to clean the floor of a pizza parlor you own, the ensuing debt would have been classified as a business debt.
Consumer debt is typically classified on things that are...consumed...and which do not appreciate in value. It’s also voluntary, which means taxes and medical bills don’t count. Consumer debts, however, do carry higher interest rates, due to a lack of collateral.
Add up all of the credit cards, payday loans, auto loans, and other forms of short-term debts owed to creditors by humans, and you have a broader economic definition of a nation’s consumer debt levels. This combined debt is different than what is owned by businesses and governments.
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Finance: What is a Credit Limit?39 Views
Finance, a la shmoop. What is a credit limit? Alright people well simply put the
maximum amount you get to charge or use on a loan or credit account, that's a [Credit limit definition written on a 100 dollar bill]
credit limit. So yeah it's that thing that keeps toddler Joey from ordering
two hundred thousand dollars worth of Snickers bars. [Toddler looking at the snickers bar]
If you accidentally you know leave out your Amex. (Illustrative example time) If you have a ten thousand
dollar line of credit or credit card you can't spend $20,000 on a trip to Vegas,
sorry. You might be able to go on a smaller trip to Atlantic City but once [Picture of Atlantic City]
you hit that 10 grand well the party's over until you pay some of that money [$10,000 flashing in red]
back, and by the way taking that smaller trip and then putting everything on red [Chips landing on a roulette table]
22 in hopes of funding your next trip to Vegas? Probably not the soundest
financial planning... sorry, let's keep it real. [Guy putting on a serious face]
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