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BUSN380 Week 3 TCO 3 Chap 7 Notes - Advantages & Disadvantages of Credit
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Although credit allows more immediate satisfaction of needs and desires it does not increase total purchasing power. Credit purchases must be paid for out of future income so it ties up the use of future income. Furthermore if your income does not increase to cover rising costs, your ability to repay credit commitments will diminish.

Before buying goods and services on credit, consider whether they will have lasting value, whether they will increase your personal satisfaction during present and future income periods, and whether your current income will continue or increase.

Paying for purchases over a period of time is more costly than paying for them with cash, due to monthly finance charges and the compounding effects of interest.

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