Search

Why Use Credit

View credit as a tool. It’s part of the way you conduct your financial life to get the things you need, such as cars, homes, technology, furniture and appliances. And of course, credit can be a necessary cushion in emergencies.

Using credit also spurs the economy. Many small businesses rely on loans to fund their start-up costs. By employing a few workers, a new shop owner boosts the income for other families in the community. These families use their earnings to buy goods and services from other businesses, making those businesses grow. 

Consumer Spending and the Economy

Consumer spending fuels 70 percent of our nation’s economic growth. When consumers spend more money, demand for products and services increases. To meet the new demand, companies buy more equipment, hire more workers and give more pay raises. 

That means employees now have more money to spend — and the cycle of economic growth continues. Borrowing is one way consumers can spend more when their income isn’t increasing. That can help the economy grow. But if too many consumers borrow more than they can afford, it can end up hurting the economy.

Infographic: Flow of Funds Accounts in the United States, Federal Reserve 2011

Source: Flow of Funds Accounts in the United States, Federal Reserve 2011

Course Home