1. Economics

2.  Credit is the provision of resources (usually money) by a creditor/lender to a debtor/borrower.  The borrower does not reimburse the lender immediately.  This creates a debt.  The borrower arranges either to repay or return those resources (or material(s) of equal value) at a later date.

3.  Lenders charge interest to borrowers.  Example: You buy a new pair of shoes for $100 with your credit card. Your credit card has a 8.99% interest rate. You end up paying $108.99 for your shoes.  Essentially, you paid $8.99 to buy the shoes now instead of waiting until later to purchase the shoes.

4.  Mortgages (Houses)  Auto Loans (Autos)  Student Loans (College)  Credit Cards (Everyday purchases)

5.  You can get the things you want earlier than by saving.  Things such as a house, car, or education are too expensive to save up for any pay all at once.  Can be beneficial and manageable as long as it is used responsibly.

6.  You pay extra for the ability to have something immediately.  Debt can increase rapidly if credit is used unwisely.  Missed payments can raise interest rates, costing you more money.  Failure to pay debts can result in legal action or bankruptcy.

7.  Borrow for your needs, not your wants.  Do not borrow more than you can afford to pay back.  Debt payments should equal 20-25% of your take home pay. ◦ If you make $500/mo. Pay no more than $125/mo.