Credit - Advantages and Disadvantages

fd fjdksl fjdksl f fCredit is the privilege of using someone else's money for a period of time. It is widely accepted as a substitute for ready cash. Using credit means that a transaction takes place between a creditor and a debtor. A creditor is any person or business that grants a loan or sells on credit. A debtor is any person or business that buys on credit or receives a loan.

2. Advantages

Instant enjoyment

Convenience

Help in an emergency

Saving money

Credit rating

Monthly statement

3. Disadvantages

Credit costs

Impulse buying

Overbuying

Financial difficulties

4. Businesses would need credit because it helps them start up by allowing them to purchase large equipment and factories.

5. Advantages:

Major Purchases: Companies borrow money to finance major purchases for large projects, such as building new factories or growing product lines.

Consolidating payments: Instead of paying for each delivery, the business may receive a bill at the end of the month, in effect buying a month's supplies on credit. If a supplier isn't paid within a month, it charges interest.

Company cards: When people in a business need to make purchases, a company may issue corporate credit bonds. These cards allow employees to make work-related purchases, travel on company business, and take clients out to dinner without the hassle of cash and reimbursements. Card holders must keep their bills and submit them at the end of each month so the business can ensure that all changes are legitimate.

Overcome cash-flow shortages: A line of credit or a loan will allow a business to borrow the money in the short term and pay off the loan when its revenues increase.