Consumer Debt
Of course, in today's society it is not simply a case of earning money and spending according to your budget. Many people (of consumers) choose to borrow money via a range of options in order to increase their individual spending power. This may be via a bank loan or credit card for example.
Consumer debt refers to the level of consumer credit which is outstanding. In economic terms it is debt that is used to boost consumerism rather than investment. Opinion is divided over the positive and negative aspects of this type of debt. While some people feel that 'living beyond your means' and using credit for anything other than investment purposes (i.e. the type of borrowing seen with a mortgage) as unwise, others see this type of spending as beneficial to the economy.
In some societies, being in any level of personal debt is basically seen as quite immoral. For instance in Japan and China it is virtually unheard of. This is firstly because the negative moral opinion of this and also because the economy is still too under developed to support this kind of borrowing. In South Korea there has been a recent influx in the level of consumer debt and here it is has been shown to fuel the growth of the economy. However, in the UK and the USA in particular, consumer debt is at an all time high and is on the rise.
One of the most common forms of consumer debt is credit card debt. Here the level of interest is much higher than with, say, mortgages and so companies earn a lot of money from the consumer for leading money. This has been linked with companies being accused of 'predatory lending' meaning that they actively pursue a consumer to lend them money and this has been widely investigated by some organisations. What is now being seen is that consumers are being lent too much money, for which the repayments are beyond their financial reach, and this has led to a growth in the field of debt consolidation and counseling in recent years.