A Guide To Credit Card Debt


When talking about credit card debt, the effects of debt depend upon such factors as the sources of loan funds, the purpose for which borrowing is done, the terms and conditions under which the debt is floated, the volume of the existing debt, the interest rates, the types of loan employed and the general economic condition of the community.

The individual may borrow from individual investors, financial institutions and commercial banks.

The effects of domestic borrowing are quite different from those of foreign borrowing.

In internal borrowing, there is no increase in the total quantity of resources available for the use.

Rather, it is a method to enable the individual to command more domestic resources.

Borrowing from financial institutions is simply a transfer of resources from private to government use.

Individuals purchase government securities by diverting their current or previously accumulated savings, after reducing their cash balances.

So the above transfer of resources from individuals or institutions does not create any expansionary effects on the economy.

The effects of debt also depend on the purpose for which the debt is created.

If the borrowed funds are used for wasteful expenditures which will not create any assets, then borrowing is indefensible.

Further, the interest rates have a bearing on the cost of borrowing and consequently upon the banking system and economic conditions in general.

The higher the interest rate for borrowing funds, the stronger the pull on funds from competing investments.

A serious diversion of funds from marginal enterprises would tend to cause the latter’s failure and this, in turn, would affect production and other economic processes, like market prices and interest rates.

If the financial institutions get tax exemptions for their loans, this will tend to encourage the purchase of their securities.

Learn more here in my section explaining all about loans and credit cards guide to help you get rid of debt and prevent further financial crisis.

What’s your biggest issue? How do you handle it – or can you think of any additional tips you can share with others if you don’t have an issue with this in your life?

Share them with us below – and then share this blog post on Twitter or Facebook or wherever you feel it could help someone you know.

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Money Matters.

I really want to know what you think of this site, this page, and to hear your tips or suggestions about it.

So please share your story or simply add a Comment in the comment box.

If you feel that the information on this page has been useful to you please give it a Like or share it with your friends - thanks!!

"
You are a life Saver!!

I recently discovered this site and I can tell you that my life has not been the same. I now come here EVERYDAY and spend at least 1 hour.

I used to spend that time browsing online fashion and beauty magazine which just means that I spend more. Now I have replaced that habit with coming here.

In future I will think about contributing articles as well. Thank you! Thank you!! Thank you!!! and God bless"

Contact Us | About Us | Terms of Use | Privacy Policy | FAQ | Testimonials