If you buy goods and services with the understanding that you'll pay later, you're one of millions of Americans who rely on credit for many of your purchases. Credit is the seller's trust in your promise and ability to pay at a later date. A convenience for the buyer, credit has been increasingly available since the mid 1940s. It has boosted sales, increased employment and created unprecedented demand for goods and services. Consumer credit use is expected to remain strong as the extension of credit continues its integral role in today's economy.
Most people pay their bills.
Many others want to, but, for a variety of reasons, aren't able to do so. Often these are consumers who, unaware of how easy it is to over-extend, take on more credit obligations than they're financially capable of repaying. When consumers don't pay those who provide goods or services on credit, those credit grantors in turn can't pay their credit grantors, the wholesalers. And so it ripples down to the producers of raw materials. One way credit grantors offset the shortfall created by unpaid bills is to raise prices.