2. Means of Purchasing
Let’s look at some of the advantages and disadvantages of some other forms of acquiring the things that we want or need.
a. Borrowing
You can borrow with a credit card or borrow through a bank – you can even borrow from a friend or relative. When you borrow money to buy something you want, you can get the item or service as soon as you can get the money – often right away, in the case of a credit card, or as soon as a financial institution has qualified you for a loan.
However, as we discuss in more detail in the credit course, the lender – financial institution or individual you borrow from – usually charges a fee for lending you their money, in the form of interest. If you borrow to purchase what you want you will almost always pay more for the item or service than you would have if you had paid cash.
Check out our Cost of Debt Calculator to see how much more your purchases might cost if you don’t manage your debt carefully.