Introduction

Personal debt is often referred to as consumer debt and it simply refers to money we borrow to pay for goods or services we need or want. When a bank, credit union, or store provides money to borrow they are known as a creditor or lender. The consumer or individual agrees to pay back what is borrowed with specified terms. There are various forms of credit that can be extended to an individual, some of them are as follows:

• Unsecured credit cards — these are funds that you can borrow up to a certain limit or dollar amount without any asset (owned by you) to back the borrowed amount. The credit is revolving, meaning if the funds are not used up to the credit limit they are available to borrow at any time. Once the balance is paid off or down, borrowing may resume. Finance or interest rate charges accumulate each month based on the outstanding balance and the stated annual percen...