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Definition of Debt
Personal Finance
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Debt is money owed and the obligation to repay the money to the person
or entity that leant the money. The one who owes the money is called the
debtor. The one who leant the money is called the creditor. Another name for
debt is liability.
Debt can take many forms. Typically debt taken on by an individual is in the form
of credit card debt, a home loan or mortgage, or other loan from a creditor which
is usually a bank. Debt for a corporation may be a loan or in the form of bonds or
other types of debt.
Usually there is a fee for the debt that is described in terms of interest.
Debt has become a major concern for many people today as it has become easier and
easier to obtain. The immediate gratification of using a credit card to get items
today and pay for them later has caused some to enter into significant high
interest debt.
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