Consumer debt 

When it comes to Consumer debt, it should not be confused with a government debt or a business debt. The consumers when have the outstanding debt are said to be involved in this kind of debt. It is a term which is related to the field of microeconomics. When there is a requirement for the funding of the consumption rather than the funding of investment, then this kind of debt is used in the field of microeconomics. When there is a requirement for increasing the production that is domestic in nature, then this debt can be taken into account. This is done on the assumption that if there is an easy availability of the credit, then the domestic production can be increased on the basis of the increase in the demand of the goods that are consumed by the people as consumer goods.

On the basis of the permanent income hypothesis, it can be said that in order to render the consumption smooth, the consumer keep on taking debts till the end of their lives. This debt is actually related to the schooling and housing. The high aspirations of people and the globalization that have exposed the world and made it transparent before the middle class as well as all the classes have led to the increase in the consumption rate in terms of loan being taken from different bans in order to fulfill the aspirations and make dreams come alive. As a consequence, Consumer debt has also increased.

The best and the latest example of consumer debt can be taken from the spurt in consumption in South Korea. It has assisted the economic expansion in a drastic way. Various types of consumer debts are consumer finance, credit card debt as well as payday loans. When it comes to consumer finance, they can be related to the alternate financial services that are extra- banking services and are provided by the banking institutions that are traditional in nature. Those who earn less depend on these services. When it comes to payday loans they are those loans that are taken for a short-term duration. These loans are aimed for the recovery of the expenses of a borrower until the payment is done by him on the subsequent payday. There are in the form of the cash advances. Different countries have different rules and regulations concerning the payday loans. On the other hand, credit card debt which is another category of this debt is an unsecured loan. It can be obtained with the help of credit cards. When a person purchases an item with the help of accredit card resulting in the unprecedented creation of debt and gets accumulated with the interest. If this debt is not paid then he or she has to give the penalty for it. This penalty is charged in the form of a late payment. Consumer debt has had a positive influence on the growth of the industry. It has given birth to a new tern called ‘consumerism’.