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Have you been wondering what debt actually is? Well in this week’s blog, we are going to define the term debt and the ins and outs of it. Debt is that which is owed; usually referencing assets owed, but the term can also cover moral obligations and other interactions not requiring money. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned.

Some companies and corporations use debt as a part of their overall corporate finance strategy.
Debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in many cases, plus interest. Historically, debt was responsible for the creation of indentured servants.

Now, let’s look at some of the different types of debt that are out there:

1. Secured and Unsecured Debt
   • Secured Debt - Debt backed or secured by collateral to reduce the risk associated with lending. An example would be a mortgage, your house is considered collateral towards the debt. If you default on repayment, the bank seizes your house, sells it and uses the proceeds to pay back the debt.
   • Unsecured Debt - A loan not secured by an underlying asset or collateral. Unsecured debt is the opposite of secured debt.
2. Private and Public Debt
3. • Private Debt - refers to unlisted, privately negotiated debt financing for corporations or large projects.
   • Public Debt - is money owed by any level of government; either central government, federal government, municipal government or local government.
4. Syndicated and Bilateral Debt
5. • Syndicated Debt - is one that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial or investment banks known as arrangers.
   •  Bilateral Debt - kind of loan that is formed between a single borrower and a single lender.

When learning about dent it is important to make sure you ask questions about anything you are confused about. The best thing you can do to avoid bad debt is by knowing all the facts and how to avoid it.

If you have any questions or want to share some information about debt, give us a shout back because we want to hear from you!

Have you ever been asked that question of, “Would you like to open a store card and receive a 20% discount on your purchase today?” Well just about every single time I go in a store that question is always asked. It seems like something everyone should get right? The store will take 20% off of your purchase today, but only if you open a store credit card. Numerous Americans are facing tremendous debt due to overspending and it is important to know the advantages and disadvantages to taking out a store credit card.

The advantages of taking out a store card:

• Promotions
• Discount on purchases
• Can help build your credit history
• Brand loyalty is reinforced
• Possible reward points

The disadvantages of taking out a store credit card:

• High interest rates
• Temptation to spend more than you have
• Low Credit Limits
• Start a bad habit of opening numerous lines of credit
• Possible hidden fees in the card

The best thing you can do when deciding to take or not take out a line of credit is do your research into the card. There is a tremendous amount of information out on the internet with millions of people willing to share their stories and experiences about credit, debt, and finances. The most important thing to remember is always weigh the advantages and disadvantages before taking out a line of credit because it can stay with you for seven years. If you are shopping and planning on purchasing a lot of things from a store and a store discount benefits you where you know you can cover the charges soon, then that can be a good deal. If you weigh the pros and cons then the decision will come to you!

If you have any questions on store credit cards or want to share your experiences then drop us a line because we want to hear from you!

Click play to list to the first episode of the Ignite Podcast about the difference between bank credit cards and a JSC FCU credit card.

Have you heard the one about the best things in life being free?  You can get a lot of things in life without paying for them – at least right away.  But eventually, the bill will find you.  We’re talking about credit.   If you use it well, you can get the things you want or need, like an education or a car.  If you don’t, it can haunt you for years.