Credit and Debt

Abstract

It is worth emphasising the difference between these two situations. Credit allows us to enjoy the benefits of goods and services before we have even paid for them. It is a common and useful system of buying and selling. Over half the homes bought in Britain are bought on credit (that is, with the help of a mortgage); and once people have moved into these homes they take their electricity and gas and telephones on credit; that is, they settle up after using the facilities. Strictly speaking, credit becomes debt only if you fail to pay the bills on time. But from the point of view of consumers, it is more realistic to regard any money owed to others as debt, since it needs taking into account when spending income.