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Definition of 'Debt'

Debt is a sum of money owed by one party (the debtor) to another party (the creditor). Debt can be either short-term or long-term. Short-term debt is typically repaid within one year, while long-term debt is repaid over a period of more than one year.

There are many different types of debt, including:

* **Personal loans:** These are loans that are made to individuals for personal use, such as to pay for a car, home improvement, or medical expenses.
* **Student loans:** These are loans that are made to students to help them pay for their education.
* **Business loans:** These are loans that are made to businesses to help them finance their operations.
* **Government debt:** This is the debt that is owed by a government to its citizens or to other governments.

Debt can be a useful tool for individuals and businesses, as it can help them to finance purchases that they would not be able to afford otherwise. However, it is important to be aware of the risks associated with debt, such as the potential for high interest rates and late payment fees.

When considering whether to take on debt, it is important to weigh the benefits against the risks. Some factors to consider include:

* The purpose of the debt
* The interest rate
* The repayment period
* The potential impact on your credit score

If you do decide to take on debt, it is important to make sure that you make your payments on time and in full. This will help you to avoid late payment fees and damage to your credit score.

Debt can be a complex topic, so it is important to do your research before you make any decisions. If you have any questions, you should consult with a financial advisor.

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