Having the money available makes more goods and services available to consumers at lower prices. .
Consumer credit can also help launch a new product. An example of this is the sales of personal computers in the 1980's and in the 1990's. Most buyers used some form of credit to pay for their personal computers in the early 1980's. The use of credit made it possible for more people to buy. .
This brings us to the principle of economics, supply and demand. Credit allows more people to purchase items they might not otherwise be able to afford. The increased consumer demand supported mass production and distribution. Since so many people were purchasing personal computers, the production costs were lowered. Manufacturers passed these savings on to consumers in the form of lower prices. Growth in the computer industry also financed research and development. This continues to bring innovation and improvements to the computer and software industry. In this example, credit helped to simulate demand and business growth. .
The use of credit by so many people had a great impact on the macro economic level. Due to the increase in sales, the industry grew rapidly, bringing job opportunities. New businesses emerged. This is another positive side to consumer credit in the economy in one industry. .
The use of credit can have major disadvantages on the macro economic level also. When consumers use credit to buy goods and services, it increases the demand for whatever they are buying. If the demand increases faster than the the supply, prices will increase, which is an effect of supply and demand. When the government, businesses, and consumers all use credit excessively, inflation results. The economy weakens and fewer job opportunities exist. .
It's no secret that credit can get people in trouble. Just turn on the TV or listen to the radio. "We got the credit, we got the cars" is a popular commercial hoping to reach those with "sell less than perfect" credit.