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Article: Credit
- Article from:
- Gale Encyclopedia of U.S. Economic History
CopyrightCOPYRIGHT 1999 The Gale Group Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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CREDIT
Credit allowed consumers and borrowers the power to buy something or receive money in exchange for future repayment with added interest. Credit card companies extended credit to consumers that allowed them to be in possession of goods and services before they were paid for. Businesses often purchased their raw materials from other businesses in advance through "trade credit," the most common form of short-term credit.
Credit was extended by individuals, businesses, and governments to pay for a variety of projects or purchases. The provision of credit generated debt that had to be repaid within a specified period of time. To protect themselves from the risk that a borrower might ...