Consumer debt
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Consumer debt is consumer credit which is outstanding. In macroeconomic terms, it is debt which is used to fund consumption rather than investment.
Some consider all debt incurred for anything else other than investments is unwise, while others believe that consumer credit is beneficial in growing the economy. The most common form of consumer debt is credit card debt, payday loans, and other consumer finance, which are often at higher interest rates than long term secured loans, such as mortgages.
Long-term consumer debt is often considered fiscally suboptimal. While some consumer items may be useful investments that justify debt (such as automobiles, which are usually but not always exempted in discussions of consumer debt, and business suits), most consumer goods are not. For example, incurring high-interest consumer debt through buying a big-screen television "now", rather than saving for it, can not usually be financially justified by the subjective benefits of having the television early.
An alternative analysis might view consumer debt as a way to increase domestic production. If credit is easily available, the increased demand for consumer goods should cause an increase of overall domestic production.
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Categories: Credit | Debt