Question

What is the problem with financing consumption with credit?

Answer 1

Explanation:

Consumption with credit eventually lower the growth of economy, as the consumption with credit is debt for individual or group by purchasing good or service or borrowings from another source. Credit is long term or short term borrowing create extra burden on borrower and sometime they go bankrupt when they have income lower than debt and cannot pay interest or principle they have consumed through credit. Consupmtion through credit is not good for both lender and borrower as in that case lender lose the money and borrower go bankrupt because of this extra burden get created on economy. People who have inconsistent income and has debt on them via credit is more vulnerable and harm to economy. Eventually they go bankrupt and bankruptcy is dangerous for economy. Credit consumption is availed in many form, loan, credit card, and mortgage. If customer repay the debt timely it can be very helpful for the growth of economy but when opposite happens it cost economy and hurt it as well.