Economics: Today and Tomorrow © 2008

Chapter 4: Going into Debt

Chapter Overviews

Section 1: Americans and Credit
The amount of money borrowed and lent each year in the United States is enormous. In fact, the nation's economy depends on individuals and groups being able to buy on credit. People find buying on credit enticing, because they do not have to pay until later.

Section 2: Sources of Loans and Credit
Financial institutions and credit cards are the two types of credit used by consumers. The financial institutions consist of: commercial banks, savings and loan associations, savings banks, credit unions, and fiancé companies. Charge accounts, credit cards, and debit cards are the types of credit that allows consumers to pay later. No matter what type of credit is used, finance charges are inevitable.

Section 3: Applying for Credit
Lenders determine creditworthiness by evaluating a borrower’s credit history. Credit use carries responsibilities. If you do not pay your debts on time, the lender may have to hire a collection agency to help recover the funds.

Section 4: Government Regulation of Credit
Laws protecting borrowers have been enacted in order to keep them from being treated unfairly and to help them make decisions. As a last resort, personal bankruptcy is an option to alleviate the stress of the financial strain of debt.