how consumer credit in finance works
consumer credit use reflects the portion of a family or individual s spending that goes to goods and services that depreciate quickly it includes necessities such as food and discretionary purchases such as cosmetics or dry cleaning services consumer credit use from month to month is closely measured by economists because it is considered an indicator of economic growth or contraction if consumers overall are willing to borrow and confident they can repay their debts on time the economy gets a boost if consumers cut back on their spending they are indicating concerns about their own financial stability in the near future the economy will contract consumer credit allows consumers to get an advance on income to buy products and services in an emergency such as a car breakdown consumer credit can help you get the funds you need credit cards are a commonly accepted form of payment so using this type of revolving credit can be convenient banks and financial institutions department stores and many other businesses offer consumer credit many credit cards also provide rewards such as cash back or travel points the main disadvantage of using revolving consumer credit is the cost to consumers who fail to pay off their entire balances every month and continue to accrue additional interest charges from month to month the average annual percentage rate on all credit cards was 23 24 as of february 2023 a single late payment can boost the cardholder s interest rate even higher 