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THE USE OF CREDIT IN AMERICAN LIVES

 

            "Buy now, Pay later," has become a way of life for many consumers in our economy. Consumer credit not only serves individuals, it plays and important role in our economy. Credit is an arrangement that allows consumers to buy goods or services now, and pay for them later. Credit offers benefits as well as drawbacks. Both must be considered when deciding how and when to use credit.
             Sales credit and cash credit are the two basic types of consumer credit. Sales credit is used to buy goods and services with a credit card or charge account. Cash credit is when money is borrowed, which may either be secured (with collateral) or unsecured. Each type comes in different forms and from different sources to meet different consumer needs. Many credit cards can be used for both. .
             There are many reasons to use credit. People enjoy the use of goods and services while they pay for them. An example would be a car loan. The customer pays for the car in set payments, but can use the car before all the payments are made. A house is a costly item that is usually difficult to purchase with cash, unless the person is rich. Many people find it difficult to save for an item like a house, but can still purchase it on credit. Credit can also offer temporary help as a source of cash for emergencies or unexpected expenses. Examples include a big medical bill or car trouble away from home. Convenience is perhaps the biggest reason people use credit. Credit is a practical way to pay for telephone and utility services. Another advantage is that people do not need to carry large amounts of cash while on vacation or when shopping. It also provides a record of purchases. Exchanges, returns, and mail orders are usually simplified by using credit. .
             Credit has a great economic effect on the goods and services we purchase. It provides the extra buying power needed to support mass production and distribution of goods and services. If people could not buy on credit, many items could not be purchased, and our economy would suffer.


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