Consumer Debt

AAA

DEFINITION of 'Consumer Debt'

Debts that are owed as a result of purchasing goods that are consumable and/or do not appreciate. Possessing high levels of consumer debt is not typically beneficial for the average individual because it increases the strain on one's sources of income to maintain regular payments. If not managed well, consumer debt can lead to bankruptcy.

INVESTOPEDIA EXPLAINS 'Consumer Debt'

Possessing some consumer debt can be beneficial under certain circumstances, such as debt accrued to buy something that will boost an individual's earning power. For example, financing a car might be a wise idea if the owner needs it to travel to work at a higher-paying job.

VIDEO

Loading the player...
RELATED TERMS
  1. Usury Rate

    A rate of interest that is usually considerably above current ...
  2. Uniform Consumer Credit Code - ...

    A code of conduct that governs consumer credit transactions. ...
  3. Consumer Credit

    A debt that someone incurs for the purpose of purchasing a good ...
  4. Credit

    1. A contractual agreement in which a borrower receives something ...
  5. Unsecured Debt

    A loan not backed by an underlying asset. Unsecured debt includes ...
  6. Line Of Credit - LOC

    An arrangement between a financial institution, usually a bank, ...
RELATED FAQS
  1. What is the difference between a possessory and a non-possessory lien?

  2. Why is more interest paid over the life of a loan when it is capitalized?

    More interest is paid over the life of a loan when that interest is capitalized because the capitalized interest is added ... Read Full Answer >>
  3. What are the differences between Chapter 7 and Chapter 13 bankruptcy?

    In the United States, the most common kinds of personal bankruptcy filings are under Chapter 7 or Chapter 13 proceedings. ... Read Full Answer >>
  4. What is the difference between a lien and an encumbrance?

    A lien represents a monetary claim levied against property to secure payment of an obligation of the property owner, while ... Read Full Answer >>
  5. Can a creditor sue me for a delinquent account?

    If a credit card account becomes delinquent, the creditor can sue the debtor for the balance as soon as the delinquency occurs. ... Read Full Answer >>
  6. How can I use quantitative analysis to evaluate investment decisions if I don't have ...

    While there are a few legitimate companies advertising that they can consolidate credit card debt, most are illegitimate ... Read Full Answer >>
Related Articles
  1. Credit & Loans

    How To Dispute A Credit Card Charge

    Follow these steps if you've been ripped off or spot an error on your bill.
  2. Retirement

    Conduct A Financial Intervention

    Find out what you can do to help someone who is finanically out of control.
  3. Budgeting

    Negotiating A Debt Settlement

    If you're being harassed by a debt-collection agency, you can take charge. Find out how.
  4. Credit & Loans

    Take Control Of Your Credit Cards

    The plastic in your wallet doesn't have to hurt your finances. Learn how to manage it responsibly.
  5. Budgeting

    Budgeting When You're Broke

    When you're short on cash, a strict budget is the best tool for finding financial stability.
  6. Credit & Loans

    Avoid The Generation Debt Trap

    There is a worldwide generation of young, educated individuals mired in unmanageable debt. Find out why.
  7. Retirement

    Understanding Credit Card Interest

    Paying these rates can impact your disposable income and your investment returns.
  8. Credit & Loans

    Digging Out Of Personal Debt

    Find out why good intentions can put consumers in an even bigger hole than before.
  9. Options & Futures

    Top 7 Most Common Financial Mistakes

    Choose fortune over disaster by avoiding these money traps.
  10. Economics

    Why U.S. Consumers Aren’t Spending

    Despite continued improvement in the labor market and lower gasoline prices, consumers' activity remains soft: retail sales growth is close to its lowest.

You May Also Like

Hot Definitions
  1. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  2. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  3. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  4. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  5. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  6. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!